{"id":1703,"date":"2021-01-28T05:58:49","date_gmt":"2021-01-28T05:58:49","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=1703"},"modified":"2021-01-28T05:58:51","modified_gmt":"2021-01-28T05:58:51","slug":"know-the-factors-which-led-to-the-growth-of-indian-nbfcs","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/","title":{"rendered":"Know the Factors which led to the growth of Indian NBFCs"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Non Banking\nFinancial Companies (NBFC) plays a very important role in contributing towards\nthe growth of the Indian financial system. It helps the individuals with their\nfinancial needs and has been playing an alternative of the banking sector in\nproviding loans and credits to the small local borrowers and the unorganized\nsector. The functioning of NBFC is similar to that of banks, but it is not a\nbank and is supervised and regulated by the national or international banking\nregulatory authority. The NBFCs plays an important role in the economic\ndevelopment, employment generation, core infrastructure transport, wealth\ncreation in India. There are number of factors which are responsible for the\nimportance of NBFC in India. Therefore, let us now know the factors which led\nto the growth of Indian NBFCs. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a8c7b2fe1c\" class=\"ez-toc-cssicon-toggle-label\"><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><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a8c7b2fe1c\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Some_of_the_factors_which_led_to_the_growth_of_Indian_NBFCs\" title=\"Some of the factors which led to the growth of Indian NBFCs\">Some of the factors which led to the growth of Indian NBFCs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Understanding_the_customer\" title=\"Understanding the customer\">Understanding the customer<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Reaching_out_to_the_wide_range_of_audience\" title=\"Reaching out to the wide range of audience\">Reaching out to the wide range of audience<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Customized_product_offerings\" title=\"Customized product offerings\">Customized product offerings<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Sturdy_and_better_risk_management\" title=\"Sturdy and better risk management\">Sturdy and better risk management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Leveraging_technology_and_right_use_of_it\" title=\"Leveraging technology and right use of it\">Leveraging technology and right use of it<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Co-_lending_arrangements\" title=\"Co- lending arrangements\">Co- lending arrangements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Dynamic_Growth\" title=\"Dynamic Growth \">Dynamic Growth <\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Supervision_of_NBFCs\" title=\"Supervision of NBFCs\">Supervision of NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/blog\/know-the-factors-which-led-to-the-growth-of-indian-nbfcs\/#Conclusion\" title=\"Conclusion \">Conclusion <\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Some_of_the_factors_which_led_to_the_growth_of_Indian_NBFCs\"><\/span>Some of the factors which led to the growth of Indian NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/640-Converted-swarit.png\" alt=\"Growth of Indian NBFCs Factors\" class=\"wp-image-1706\" width=\"380\" height=\"518\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/640-Converted-swarit.png 700w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/640-Converted-swarit-220x300.png 220w\" sizes=\"(max-width: 380px) 100vw, 380px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_the_customer\"><\/span>Understanding the customer<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The Indian NBFCs\nfocus on deeply understanding the needs of the customers by focusing on the\nunorganized and underserved segment of the economy and frequently communicating\nand interacting with the customer segments. It ensures that it is efficient in\nits performance by upgrading its delivery and enhancing the experience of its\nproducts and services. Also, NBFCs keep on modifying its policies to meet the\nneeds of its customers. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reaching_out_to_the_wide_range_of_audience\"><\/span>Reaching out to the wide range of audience<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong><a href=\"https:\/\/swaritadvisors.com\/nbfc-registration\" class=\"text-primary\">NBFC License<\/a><\/strong> are now building a connected channel experience that provides with 24*7 sales and services, reaching out to the Tier- 2, Tier- 3 and Tier- 4 markets and providing loans to several customers. NBFCs provide 24*7 online helpline numbers on their websites. It is mostly a toll- free number where the customers can reach out to resolve any queries regarding the financial products. It has created new and better ways to connect with the customers. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Customized_product_offerings\"><\/span>Customized product offerings<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Where on the one hand, the banks are required to provide standard rate of interests and charges on their products as subject to the rules and regulations by the Reserve Bank of India (<strong>RBI<sup><a href=\"https:\/\/www.rbi.org.in\/\" class=\"text-primary\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/strong>), on the other hand, even though there are certain guidelines for NBFCs as well, but they are not rigid for traditional banking institutions. Therefore, this allows the NBFCs to offer customized products as per the requirements of the clients. Many NBFCs focuses on a limited line or often a mono- line set of products to serve to the target customer segment. It has customized the products offerings to serve with unique characteristics to the customer segment and focus on meeting their needs. Many NBFCs are adopting non- standard pricing models for their product lines, in line with the profile of the customer and inherent risk of lending. This facility to avail customized financial products entices and attracts a lot of people to opt or choose the NBFCs over the traditional lending institutions. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Sturdy_and_better_risk_management\"><\/span>Sturdy and better risk management<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Certain\nregulations of the NBFCs direct them to ensure the highest standard of risk\nmanagement for all its financial products. NBFCs appoint financial experts at\nall the levels of management to ensure that it provides highest security\nstandards and discretion. It keeps an agile, sturdy and better risk management\nmodel. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Leveraging_technology_and_right_use_of_it\"><\/span>Leveraging technology and right use of it<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Using of\ntechnology is helping the NBFCs to customize the credit assessment models and\nmake the most effective use of business processes which thereby results in\nreducing the time to market and help in improving the customer experience. The\nNBFCs have been pro active in incorporating technology with all their\nprocesses. Most of them have online platforms that help to make fast online\nprocessing of loans, insurance applications and etc. It is investing much in\ndata analytics and artificial intelligence to connect with its target customers\nmore effectively. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Co-_lending_arrangements\"><\/span>Co- lending arrangements<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>NBFCs are making\ninitiatives to tie up with multiple alternative lenders with commercial banks\nand digital platforms, thereby adding to their targeted customer base. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Dynamic_Growth\"><\/span>Dynamic Growth <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The NBFCs with\ntheir unique team and credit delivery have got much valuation and credits for\nscaling up its finance provisions for the small scale businesses while\nmaintaining its strong reputation, ability and quality. The loan provisions\nprovided by NBFCs facilitate the small marketers with their occupational needs\nsuch as technology up gradation, equipment purchase, business expansion and\nworking capital requirements. Further, the NBFCs are focusing on developing its\nnetworks in specific geographies. It has developed innovative ideas to become\ndynamic in its growth and reach out to the people. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Supervision_of_NBFCs\"><\/span>Supervision of NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To ensure that\nNBFC operates and functions properly and avoid excessive risk taking, the\nReserve Bank of India\u2019s department of Non- Banking supervision has formed a\nfour pronged supervisory framework such as: &#8211; <\/p>\n\n\n\n<ul><li>On- site inspection on the basis of assessment\nand evaluation of capital, management, assets, liquidity, earnings and system. <\/li><li>Use of market intelligence system. <\/li><li>Off- site monitoring supported by state of the\nart technology that is through the periodic reports from the NBFCs. <\/li><li>Reports of statutory auditors of NBFCs. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>NBFCs contribute\na lot towards the growth and development of the Indian economy. It has become\nprominent in a wide range of activities like finance, investments, equipment\nlease finance etc. It has greater reach and flexibility in utilization of\nresources. It focuses on creating a great connection with its customers and\nunderstands their needs and requirements. There are many factors which led to\nthe growth of Indian NBFCs. NBFC as financial institutions has become\nsuccessfully strong and meet with the challenges in today\u2019s competition. <\/p>\n\n\n\n<p>The important factors stated above have been influencing the development of the Non- Banking Financial Companies (NBFC) in India. Ensuring financial access in order to fuel growth of the Indian economy is essential. The rise of NBFCs will surely change the way of banking system in the country. It would result in the strategic and sustainable growth for NBFCs for a long term. Further, as now more and more individuals are taking digital mode of transaction and trading, the digital platform will potentially open new paths for development in India.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/nbfc-compliance-under-fema\/\">A Complete Summary of NBFC Compliance under FEMA<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Non Banking Financial Companies (NBFC) plays a very important role in contributing towards the growth of the Indian financial system. It helps the individuals with their financial needs and has been playing an alternative of the banking sector in providing loans and credits to the small local borrowers and the unorganized sector. The functioning [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":1704,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[58],"tags":[297],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/1703"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=1703"}],"version-history":[{"count":7,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/1703\/revisions"}],"predecessor-version":[{"id":1712,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/1703\/revisions\/1712"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/1704"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=1703"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=1703"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=1703"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}