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4 Top Factors That Led to the Growth of NBFCs in India

  • Highlights

  • NBFCs leverage technology to enhance customer experience

  • NBFCs have a robust risk management framework in place

  • NBFC loans are easy to access and tailored to niche markets

  • Get a pre-approved Personal Loan from Bajaj Finserv

Within the financial sector, banks have always maintained a strong position both in the industry and the minds of the population. However, over the last decade, other financial entities known as Non-Banking Financial Companies (NBFCs) have started to make a name for themselves. But what is an NBFC in India? Simply put, it is a company registered under the Companies Act 2013, or the Companies Act, 1956 and offers services like lending, leasing, insurance, hire-purchase, share acquisition, and receiving deposits. NBFCs in India are managed by the Reserve Bank of India (RBI) and the Ministry of Corporate Affairs.

It is also important to note that there are several types of NBFCs in India. These are mainly categorised based on whether they accept deposits and on the basis of the services offered. As such, these companies have steadily grown their foothold in the economy and are now quite popular as well. The continual NBFC growth in India is a good thing for you as a customer since the features of non-banking financial institutions are known to be more personalised in nature. But, before getting into how NBFCs benefit you, take a look at the top factors responsible for the growth of the NBFC sector in India.

Additional Read: How to Apply for Personal Loan?

Technology and Fintech Advancements

One of the main factors responsible for the growth of the NBFC market in India is the way in which these companies have leveraged technology. Today, these companies have digitised provisions for almost every service offered. These make onboarding quicker and services easier to access and use too. What’s more, fintech advancements allow NBFCs to optimise their credit assessment models. As such, the customer experience is greatly enhanced and business processes are much quicker in comparison to traditional modes.

Besides improving customer experience, NBFCs have also leveraged technology to widen their reach. Customers across city tiers and markets are now exposed to the services that NBFCs offer. Other technological advancements like AI and data analytics have also played an instrumental role in improving the relationship NBFCs have with customers.

Enhanced Understanding of The Customer Base

As mentioned, NBFCs in India use technology to enhance user experience. With help of data analytics, these companies can specifically target the unorganised sector of the population and understand their needs better. NBFCs usually have market research teams that are dedicated to getting results pertaining to the specific needs of different age groups, job types, and other such categories. As such, NBFCs are able to develop and deliver more suited products for niche markets.

Additional Read: Apply for a Bajaj Finserv Personal Loan in Minutes

Customised Product Offerings

With targeted data and a deep understanding of the customer base, NBFCs are well equipped to offer customised offerings. This allows customers to choose highly specific retail loans and other such financial instruments. NBFCs enjoy some leeway with respect to RBI guidelines and ultimately this means that customers can get access to tailored offerings on simple eligibility terms. These offerings have unique characteristics that may not be available elsewhere in the market. Among the many features of NBFCs, the ability to offer customised solutions has definitely helped boost growth.

New and Improved Risk Management Framework By the RBI

When it comes to understanding the factors responsible for NBFCs growth in India, it is important to note the RBI’s liquidity risk management framework put forth in 2019. Here, it was stated that deposit-taking NBFCs and non-deposit taking NBFCs with an asset size of more than Rs.10,000 crore would have to maintain a liquidity coverage ratio (LCR) of 50% before 1 December 2020. This is to progressively increase to 100% by December 2024. In the same vein, non-deposit taking NBFCs with assets size ranging between Rs.5,000 crore and Rs.10,000 crore would also have to maintain a minimum LCR of 30%.

Thanks to this LCR reporting framework, there could be potential drop in cost of funds for NBFCs on account of a reduced risk quotient. Moreover, this framework is an intelligent long-term solution that protects NBFCs and adds to the robustness of the sector.

The NBFC market in India is projected to grow in the coming years with backing from governing bodies and patronage from MSMEs. Further, the RBI’s commitment to keep NBFCs in India free of fails is also a strong indicator that these financial entities are primed for unprecedented future growth. All the above-mentioned factors aid NBFC growth in India and today, NBFC offerings are among the best available to you. You can find good examples within the retail loan sector, where leading lenders leverage technology to give you access to offerings on personalised terms.

The Bajaj Finserv Personal Loan is one such offering and it is easy to qualify for and avail. With a good financial profile, you can easily access a high-value sanction thanks to the instant approval provision. With this unsecured personal loan, you can get up to Rs.25 lakh at an attractive interest rate and for a flexible tenor that ranges up to 60 months. In keeping with the key features of NBFC lenders, Bajaj Finserv allows you to enjoy a digital experience right from the first steps of loan application to loan management. What’s more, you can get full disbursal of the sanction within 24 hours, thus making this loan reliable in a pinch. To get these benefits and more from one of the top NBFCs in India, check your pre-approved offer today for a hassle-free borrowing experience.

The content of this document is meant merely for information purposes. The personal loan features mentioned in this article are subject to updation, completion, revision, verification and the same may change materially based on policy revisions. For more details, please visit our Personal Loan terms and conditions page here.

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