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Factors That Led to the Growth of NBFCs in India

By Finserv MARKETS - Aug 5,2019
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Factors That Led to the Growth of NBFCs in India

Apart from traditional money lenders, banks were the only other options for getting a loan a few years back. However, over time, the role of non-banking financial companies (NBFCs) has also increased in the Indian financial sector. These NBFCs perform same as a bank does, but are not a bank and are supervised by a national or international banking regulatory authority. Be it a personal loan, real-estate finance or life-insurance; these NBFCs cater to all your desired financial services. Every year, these NBFCs are expected to witness a growth of 4%-6%. A number of factors have been cumulatively responsible for increasing the importance of these NBFCs in India.

Discussed below are some of the key factors that have led to the growth of NBFC in the Indian market.

A Better Understanding of Customer Needs

Most NBFCs have competent markets research teams that periodically take surveys to know about consumer needs and demands. These surveys prove extremely useful in determining the financial needs of people of different age group, ethnicity, or job type. As a result, most of these NBFCs are also able to provide financial assistance to the segment of the society that finds it difficult to avail financial aid from traditional banks with rigid policies.

Customized products

As mentioned earlier, most banks provide standard interest rates and charges on their products that are subject to rules and regulations by the RBI. While there are certain RBI guidelines for NBFCs as well, they are not as stringent as those for traditional banking institutes. This allows several NBFCs to offer customized products as per their client’s requirement. The facility to avail tailor-made financial products entices a lot of people to choose these NBFCs over traditional money-lending institutions.

The Right Use of Technology

Recently, several government banks have gone digital in all their transactions. However, NBFCs have been comparatively pro-active in incorporating technology with all their processes way before them. This has even helped them get a wider consumer reach in a short span of time. Most NBFCs have online platforms that are competent for fast online processing of loan, ULIP or insurance applications. As compared to the time taken to sanction the loan approval by banks, NBFCs take less time to process and assess your application. This leads to instant loan disbursal in your account.

24/7 Availability

Most NBFCs provide 24/7 online helpline numbers on their websites. This is mostly a toll-free number, where customers can call anytime to resolve any queries they have about the financial products.

Better Risk Management

Certain NBFC regulations dictate them to ensure the highest standard of risk management for all their financial products. This is why most NBFCs appoint financial experts at each level of management to ensure the highest standard of security and discretion.

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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522