{"id":9624,"date":"2020-03-24T08:30:18","date_gmt":"2020-03-24T03:00:18","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=9624"},"modified":"2021-03-22T18:10:08","modified_gmt":"2021-03-22T12:40:08","slug":"what-role-does-nbfc-play-in-the-economic-development-of-india","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/what-role-does-nbfc-play-in-the-economic-development-of-india\/","title":{"rendered":"What role does NBFC Play in the Economic Development of India?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">A robust banking and financial system are essential components to channelize the growth of an economy. NBFC\u2019s are financial intermediaries that play a vital role in developing Indian economy. It offers credit facilities to remote areas and supports those individuals who are often overlooked by the banks. Non-Banking Financial Companies underpins the weaker sections of the society, thereby bringing equilibrium in the nation. This write-up underlines the role of NBFC in the economic development of India.  <\/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-6a3a739edbcf7\" 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-6a3a739edbcf7\"  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\/learning\/what-role-does-nbfc-play-in-the-economic-development-of-india\/#Importance_of_Non-Banking_Financial_Companies\" title=\"Importance of Non-Banking Financial Companies  \">Importance of Non-Banking Financial Companies  <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/what-role-does-nbfc-play-in-the-economic-development-of-india\/#How_are_NBFCs_a_Game-Changer_in_the_Financial_Sector\" title=\"How are NBFC\u2019s a Game-Changer in the Financial Sector?\">How are NBFC\u2019s a Game-Changer in the Financial Sector?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/what-role-does-nbfc-play-in-the-economic-development-of-india\/#Role_of_NBFC_in_the_economic_development_of_India\" title=\"Role of NBFC in\nthe economic development of India\">Role of NBFC in\nthe economic development of India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/what-role-does-nbfc-play-in-the-economic-development-of-india\/#Revelation_of_NBFC_future\" title=\"Revelation of NBFC future\">Revelation of NBFC future<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/what-role-does-nbfc-play-in-the-economic-development-of-india\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Importance_of_Non-Banking_Financial_Companies\"><\/span>Importance of Non-Banking Financial Companies  <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>NBFC\u2019s have been a chief contributor to the growth of (BFSI) Banking, Financial Services and Insurance industry. Non-Banking Financial Companies emerged as a perfect alternative for banks in terms of raising funds for businesses. Reserve Bank of India regulates the functions of NBFC\u2019s considering its importance in accelerating society. NBFC\u2019s are incorporated under <a href=\"https:\/\/en.wikipedia.org\/wiki\/Companies_Act_2013\">Companies Act, 2013<\/a>  and cater a wide range of financial services like the acquisition of stocks, bonds, securities, debentures, shares, loans and advances.\u00a0Non-Banking Financial Companies value customers and emphasize on the creation of innovative products. The role of NBFC in economic development is beyond assessment due to its credibility in supporting infrastructural &amp; manufacturing development.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_are_NBFCs_a_Game-Changer_in_the_Financial_Sector\"><\/span>How are NBFC\u2019s a Game-Changer in the Financial Sector?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Reserve Bank of India acclaims\nNBFC\u2019s to bring revolution in the financial sector. Here are some\nfactors that Non-Banking Financial Companies contribute in Indian\neconomy:<\/p>\n\n\n\n<ul><li><strong>Market Size:<\/strong>\u00a0NBFC market has rapidly grown in the last few years despite the downturn in the economy. NBFC sector tremendously grew in size from INR 26.2 Lakh Crore (2017-18) to INR 30.9 Lakh Crore (2018-19). <\/li><li><strong>Growth:<\/strong>\u00a0In terms of yearly growth rate, NBFC industry has surpassed Banking sector. On average, NBFC grew at a rate of about 22% each year, thus contributes a large part to the economy every year. <\/li><li><strong>Profitability Ratio:<\/strong>\u00a0Since one requires less capital to set up NBFC than a bank, thereby it turns out to be a more profitable business model due to lower costs. NBFC\u2019s offer loans to customers at a cheaper interest which results in credit growth. An increase in the sum of money being lent to the customers is more than that of the banks; it ultimately increases the customer base of NBFC\u2019s with more prospects opting their services. <\/li><li><strong>Infrastructure Lending:\u00a0<\/strong>A country\u2019s economy is defined by the state of its infrastructure<strong>. <\/strong>NBFC\u2019s contribute extensively to the economy by lending funds to Infrastructure sector, which is very crucial for a developing nation like India. An infrastructure venture requires a large number of funds which generates revenue only after a longer time-frame; thereby making such projects carry risk when it comes to lending. Hence, banks deter from lending to infrastructure projects in the last few years. Besides, NBFC\u2019s have contributed more to infrastructure lending.  <\/li><li><strong>Promotes inclusive growth:<\/strong>\u00a0NBFC\u2019s serve credit facilities to a broad spectrum of customers both in rural and urban areas. Non-Banking Financial Companies finance micro and small-scale Companies, which fosters progression in rural areas. Such financial institutions also provide small-ticket loans accessible for housing projects which stimulates inclusive growth in the country.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_of_NBFC_in_the_economic_development_of_India\"><\/span>Role of NBFC in\nthe economic development of India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>NBFC is the backbone and a\nquintessential source for the economic flow. Let\u2019s look at the ways\nin which it aids society:<\/p>\n\n\n\n<ul><li><strong>Boost employment: <\/strong>NBFC\u2019s jointly works with the Government to create more employment opportunities by investing in SME and Private sector. Private Companies helps in generating occupation for the smooth functioning of the firm. An increase in the new businesses simultaneously raises employment and NBFC financially supports these firms.<\/li><li><strong>Render long-term credit: <\/strong>Unlike the traditional lenders, NBFC\u2019s provide long-term credit to facilitate Trade &amp; Commerce industry. NBFC\u2019s capitalize mega and large infrastructural projects which uplifts the economy at an extensive level. The long-term credit services with feasible interest rates ensure sustainable economic growth. <\/li><li><strong>Mobilization of resources: <\/strong>NBFC\u2019s mobilize funds, resources and capital. Non-Banking Financial Companies create a balance between the distribution of assets and intraregional income. NBFC\u2019s prove to be a potent lender by turning savings into investment practices. <\/li><li><strong>Nurtures standard of living:<\/strong> NBFC also shapes up society by uplifting living standards. Such entities drive foreign endowments from various regions, countries and agencies to support economic development. Further, NBFC\u2019s participate in raising funds from the public and converting it into capital for industrial and several other sectors. An increase in emerging businesses raises the demand for manpower hence creates employment, which eventually raises the purchasing power of people and upgrades their living standards. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Revelation_of_NBFC_future\"><\/span>Revelation of NBFC future<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Incorporation of innovation will be a stepping stone for success of NBFC\u2019s. It will not only mark a turning point in financial sector but will ease the process of credit accessibility to the customers too. NBFC\u2019s will surely be a game changer in financial arena. It will streamline bill payment services which are of utmost importance presently.<\/p>\n\n\n\n<p>Going forward, NBFC\u2019s will play a substantial role in regards to financial inclusion for MSME\u2019s and individuals that will be the backbone of an Indian economy. Further, NBFC\u2019s will procure data and algorithm to fine-tune the marketing strategies and reduce the cost per acquisition resulting in higher margins. NBFC\u2019s leverage technology and offers real-time solutions for individual\u2019s progress and the Company\u2019s stability. Technology-driven services will preserve Non-Banking Financial Companies in the long run. By nurturing the technologies like Cloud and SaaS-based models, NBFC\u2019s will continue to empower the financial sector in our country.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In a nutshell, one can say that role of NBFC in the economic development is excessive. If you also want to commence NBFC business, reach out to Swarit Advisors. With an experience of more than 10 years, we provide an array of <strong><a class=\"text-primary\" href=\"https:\/\/swaritadvisors.com\/nbfc-registration\">NBFC registration<\/a><\/strong> services. Our team undertakes the legal procedure in NBFC Registration. Our aim is to scale up every business type that intends to start NBFC by providing end to end Legal solutions.<\/p>\n\n\n\n<p><strong>Also, Read: <\/strong><mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/a-peek-into-the-future-of-nbfcs-in-india\/\">A Peek into the Future of NBFCs in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A robust banking and financial system are essential components to channelize the growth of an economy. NBFC\u2019s are financial intermediaries that play a vital role in developing Indian economy. It offers credit facilities to remote areas and supports those individuals who are often overlooked by the banks. Non-Banking Financial Companies underpins the weaker sections of [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":9625,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[89,544],"tags":[1022],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9624"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=9624"}],"version-history":[{"count":13,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9624\/revisions"}],"predecessor-version":[{"id":18305,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9624\/revisions\/18305"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/9625"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=9624"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=9624"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=9624"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}