{"id":5466,"date":"2020-03-27T13:30:35","date_gmt":"2020-03-27T08:00:35","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=5466"},"modified":"2021-10-22T16:47:38","modified_gmt":"2021-10-22T11:17:38","slug":"future-of-nbfcs-in-india","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/future-of-nbfcs-in-india\/","title":{"rendered":"Future of NBFCs in India &#8211; A Reality Check"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In the Indian economy, NBFC is playing a phenomenal role by providing excellent sources of funding. NBFC has gone through extraordinary progress over the past few years. In India, NBFC majorly covers those sections that are not covered by the banks, i.e. Infrastructure, micro, small and medium enterprises. NBFCs are often used by the borrower as compares to the banks as they are quite efficient in meeting financial requirements. In the article, we will discuss the Future of <a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFCs in India<\/strong><\/a>, how technologies are uplifting the growth of NBFCs, and how the Government is taking measures to uplift the growth of NBFCs.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/future-of-nbfcs-in-india\/#Significance_of_NBFCs_in_the_Indian_Economy-_An_Overview\" >Significance of NBFCs in the Indian Economy- An Overview<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/future-of-nbfcs-in-india\/#Role_of_Advanced_technology_in_the_Future_of_NBFCs\" >Role of Advanced technology in the Future of NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/future-of-nbfcs-in-india\/#Issues_Faced_by_an_NBFCs\" >Issues Faced by an NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/future-of-nbfcs-in-india\/#Prospect_in_the_2020-An_overview_of_the_initiative_taken_by_the_Government_for_the_better_Future_of_NBFCs\" >Prospect in the 2020-An overview of the initiative taken by the Government for the better Future of NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/future-of-nbfcs-in-india\/#Takeaway\" >Takeaway<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Significance_of_NBFCs_in_the_Indian_Economy-_An_Overview\"><\/span>Significance of NBFCs in the Indian Economy- An Overview<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the Indian\neconomy, NBFCs are playing a vital role in uplifting the Infrastructure,\ncreation of wealth and employment generation. NBFCs are majorly focusing on the\nweaker sections of the society.<\/p>\n\n\n\n<p>NBFCs are\noffering a varied range of products, financing, leasing, housing finance, and\ngold loans for carrying out the new division, i.e. durable consumer Loans by\ntaking into consideration the following key points-<\/p>\n\n\n\n<ul><li>Providing tailor-made products offering and products to the customers.<\/li><li>Uplifting the business model through improved efficiency and enhanced experience.<\/li><\/ul>\n\n\n\n<p>Further, it has\nemerged as an alternative to conventional Banking. Though the year 2019 had\nbrought several challenges for the sector, and it was evident that there is an\nurgent need to hold the positives. Taking into consideration the future of\nNBFCs in India, it was announced in the\nbudget (2019) the growth aspiration of achieving a $ 5 trillion economy in\n2024.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_of_Advanced_technology_in_the_Future_of_NBFCs\"><\/span>Role of Advanced technology in the Future of NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In\nrecent times, the regulation for NBFCs has become stricter, and the borrowing\ncost has increased. NBFCs are focusing on developing new and innovative\nproducts through advanced technologies. Advanced technologies help the NBFCs in\nadopting the business and powered models that help in facilitating the design\nlaunch and execution of the tailored products and services used by the NBFCs.\nTechnology-driven services help the NBFCs in lowering the costs and in\nincreasing the customer base.<\/p>\n\n\n\n<p>Newly\nformed NBFCs are using advanced technology which will result in a better future\nof NBFCs. Technologies like Artificial Intelligence, Machine learning have\nprepared the lenders in evaluating the customer\u2019s perception and also in\nmaintaining alternative credit scoring models.<\/p>\n\n\n\n<p>For the better future of NBFCs, NBFCs are using the technology-driven business model, which is reducing the dependency on manual tasks.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-of-nbfc-registration-in-india\/\">NBFC Registration \u2013 Know the Entire Incorporation Procedure<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issues_Faced_by_an_NBFCs\"><\/span>Issues Faced by an NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>NBFCs\nare facing the issue of a liquidity crisis. The market was grasped by not\ntaking the risk, which as a result, affected the credit outflow of NBFCs.\nWithout considering the asset-liability scenario, NBFCs went on thoughtless\ncredit expansion as a consequence; the result is in front of everyone. The perception\nof NBFCs regarding the risk-taking ability of credit has increased\nsignificantly, which resulted in taking the strict steps by the Government. <\/p>\n\n\n\n<p>Further, NBFCs were also facing issues like Asset quality and offhand growth in the loan book. The issue of asset quality was mostly faced by wholesale financers. However, companies in the retail segment are not much concerned about asset quality.<\/p>\n\n\n\n<div class=\"shadow1\">It is apparent that the slowdown of the economy is real, the confidence of the consumer is declining, and RBI has limited the GDP growth rate at 4.5%. NBFCs are finding ways to manage their books, demand and stay in business in long-run. Through Advanced technology, New NBFC lenders are focusing on processes and models driven aids.<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prospect_in_the_2020-An_overview_of_the_initiative_taken_by_the_Government_for_the_better_Future_of_NBFCs\"><\/span>Prospect in the 2020-An overview of the initiative taken by the Government for the better Future of NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In\nIndia, with a view to enhance the demand and to ensure liquidity, the\nGovernment has taken various measures by organizing the Loan mela and Partial\nCredit Guarantee scheme.<\/p>\n\n\n\n<p>Observing the scenario, <em><strong>Amit Shah<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Amit_Shah\"><em><strong>[1]<\/strong><\/em><\/a><\/sup> said, From the industry point of view, the outlook for 2020 is cautious as the slowdown has begun and it cannot be spun that easily. A booster shot is required to uplift the NBFC. Adding to that, Shah further said<\/p>\n\n\n\n<div class=\"shadow1\">\u201cStructurally, the Government can make it easier for MSMEs to survive the environment by providing more subsidies to some sectors and build more platforms for small-scale industries to expand. The Government should consider relaxing and easing some compliances, for e.g. reforms on taxes or entry requirements for DFIs&#8221;.<\/div>\n\n\n\n<p>In recent years, the future\nof NBFCs is witnessing good growth in consumer lending. The liquidity position\nhas improved and is gradually coming back to normal. In the future also, NBFCs\nwill play a crucial role in economic development and in financial inclusion.\nWith the increase in economic growth, the need for credit will rise more than\nproportionate.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Takeaway\"><\/span>Takeaway<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For uplifting the Future of NBFCs, NBFCs are learning to evaluate the overall market scenario and by approaching the new strategies to lend to different segments<strong>.<\/strong> To compete with the issues and loopholes, the Government shall consider the relaxing and easy <a href=\"https:\/\/corpbiz.io\/learning\/online-nbfc-annual-compliances-prescribed-by-the-rbi\/\"><strong>NBFC compliances<\/strong><\/a>. The future of NBFC calls for a reinvention of the business model of NBFCs, which will definitely result in better business processes, better execution, and underwriting.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/online-nbfc-annual-compliances-prescribed-by-the-rbi\/\">\nAre you running an NBFC? Get updated about the list of Annual Compliances Prescribed by the RBI\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In the Indian economy, NBFC is playing a phenomenal role by providing excellent sources of funding. NBFC has gone through extraordinary progress over the past few years. In India, NBFC majorly covers those sections that are not covered by the banks, i.e. Infrastructure, micro, small and medium enterprises. NBFCs are often used by the borrower [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":5470,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[91,323],"tags":[428],"acf":{"service_id":"8"},"authorName":"Priyanka Bajpayee","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/03\/IMG-20220303-WA0005.jpg","authorDescription":"A Company Secretary together with PG in international Business, she has gained significant experience as legal content writer. She has keen interest in doing research and writing on legal and financial subject matters. She also holds work experience in legal compliances.","postViews":15791,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/5466"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=5466"}],"version-history":[{"count":22,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/5466\/revisions"}],"predecessor-version":[{"id":36970,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/5466\/revisions\/36970"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/5470"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=5466"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=5466"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=5466"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}