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Factors That Led to the Growth of NBFCs in India

The transformation of Non-Banking Financial Companies (NBFC) in India in the past few years plays an important role in growth of Indian Financial system. NBFC’s have emerged successful as compared to Banks as their customized product offerings help individuals with their financial needs.

NBFC Credit Market growth is as shown below.

Financial Year Growth
2016 13%
2017 16%
2018 20%

NBFC’s grow at an average rate of 4%-6% every year. Following are the major factors that led to the growth of NBFC’s in India

Understanding the customer

  1. Focus on unorganized & under-served segments of the economy.
  2. Customization of rigid policies to meet customer needs

Customized product offering

  1. Emphasis on a limited line (or often a mono-line set of products) to serve the target customer segment
  2. Adoption of non-standard pricing models for product lines, in-line with the customer profile and inherent risk of lending

Leveraging technology

  1. Reduced time to market and enhanced customer experience
  2. Offering customized credit assessment models with optimized business processes

Reaching out to wider audience

  1. Catering to the needs of Tier-2, Tier-3 and Tier-4 markets
  2. Distribution of loans across several customer touch-points with 24/7 sales and service

Risk Management

  1. Improved governance with agile risk management model
  2. NBFCs continue to grow with Chief Risk Officer (CRO) ensuring the highest standards of risk management.

growth of nbfc in india

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