Você está na página 1de 2

21.

Challenges & Future Outlook of NBFCs


NBFCs
While NBFCs have witnessed substantial growth over the years, there are few areas of
concern which need to be addressed. For instance, while NBFCs have enjoyed an edge over
banks in semi-urban & rural markets where banking network is not yet strong, they have
limited spread in urban markets. Nonetheless, in recent years, NBFCs have begun to create
niches for themselves that are often neglected by banks. These primarily include providing
finance to non-salaried individuals, traders, transporters, stock brokers, etc.

NBFC

In the past few years, the increased competition from banks in the retail finance segment has
led to excess diversification by NBFCS from their core business activities. The sector has
witnessed introduction of various innovative products such as used vehicles financing, small
personal loans, three-wheeler financing, IPO financing, finance for tyres & fuel, asset
management, mutual fund distribution and insurance advisory, etc. Besides, NBFCs are
aspiring to emerge as a one-stop shop for all financial services.
NBFCs have also ventured into riskier segments such as unsecured loans, purchase finance
for used commercial vehicles, capital market lending, etc. Moreover, NBFCs customer
profile is concentrated on the self-employed segment. The earlier mentioned factors increase
their risk profile which could have adverse impact on the financial health of NBFCs.
Although some improvement has been witnessed in auto sales in last few months, the demand
for vehicle finance is likely to remain subdued. Besides, given the significant slowdown in
the Indian economy, NBFCs were encountering structural challenges such as increased
refinancing risk, short-term asset-liability mismatch leading to decelerating growth and
declining margins. This is expected to have a bearing on the profitability of NBFCs in the
medium term.
Given that growth in vehicle finance might remain low in the medium term, NBFCs are
expected to focus on rural and semi-urban markets. Credit requirements of rural population
are primarily met by banks from organised sector or local money lenders. Though, in recent
years there has been some penetration of NBFCs in this segment, the market still remains
largely untapped. There is a large section of rural population which does not have access to
A Study on Non Banking Financial Companies in India

credit either because of their inability to meet the lending covenants of banks or due to high
interest rates of local money lenders. This provides a huge opportunity for NBFC sector to
spread their business in the rural & semi-urban markets.

A Study on Non Banking Financial Companies in India

Você também pode gostar