The Non-Banking Financial Companies (NBFCs) in the Indian economy are playing an incredible role by providing outstanding sources of funding. Over the course of the past few years, NBFC in India has experienced remarkable growth and development. In India, the majority of micro, small, and medium firms, as well as infrastructure, are financed by non-bank financial companies (NBFC) rather than by traditional banks. In comparison to banks, NBFCs in India are frequently employed by borrowers because of their greater effectiveness in satisfying their necessary financial obligations.
By utilizing technology to improve their credit distribution processes, non-banking financial companies have been able to surpass banks in the Mortgage Industry. Through the use of technology, non-bank financial companies (NBFCs) have been able to expand into underdeveloped market groups. NBFCs present in India have carved out unique business areas themselves by focusing on their clients’ needs and developing individualized solutions, something that commercial banks are unable to do.
Fintech and NBFCs
In the Indian financial sector, FinTech companies have been generating a lot of buzz across a variety of value chains. Over the past few years, they have also been incorporated into the aim of financial inclusion that the Indian government has been pursuing. FinTech is currently gaining traction within areas of lending, wealth management, savings, and especially credit systems. This is due to the immense potential that FinTech possesses to disrupt both the current banking system as well as traditional banking practices.
Companies in the modern-day FinTech industry are making effective use of newer technologies to overcome obstacles and build products and services, including last mile achievement as well as delivery, alternative lending models, fraud prevention, regulatory requirements, entrepreneurship automation for accounting, treasury, as well as reconciliation for conventional NBFC in India.
Because of the use of technology, NBFC in India will be able to tailor credit assessment models as well as streamline business processes. This helps reduce the amount of time it takes to bring a product to market and helps better customer experience. NBFCs are increasing their investments in machine learning and artificial intelligence to develop robust relationships only with the consumer categories they are targeting.
An Exposition of the Role of Non-Banking Financial Companies in the Indian Economy
The non-bank financial companies (NBFCs) in the Indian economy are playing an important part in the improvement of infrastructure, the development of wealth, and the generation of employment opportunities. NBFC in India is mostly concentrating its efforts on the more disadvantaged members of society.
To carry out the new division, namely durable consumer Loans, NBFC in India is offering a wide variety of goods, including financing, leasing, housing finance, including gold loans. This is being done by putting into consideration the following essential points:
Providing customers with individualized product offerings and items to meet their specific needs.
Increasing the profitability of the business model by boosting both productivity and customer satisfaction.
In addition, it has developed into an alternative to traditional banking practices. Even though the year 2019 brought several difficulties for the industry, it was abundantly clear that there is an immediate need to focus on the positives. It was announced in the 2019 budget that the growth objective of having a $ 5 trillion GDP in 2024 was going to be pursued. This was done with consideration given to the future of NBFCs in India.
Conclusion
As entirely new business models (of the NBFCs) transform, so should the rules surrounding the NBFCs. The excellent thing is that now the government would work forward into harmonizing the regulations relating to different categories of NBFCs to enable ease-of-doing-business in just this sector. NBFCs have to give serious consideration to modifying their current business processes to expand in a hybrid globe (digital + physical).
