NBFC BENIFITS WWW.WEBSOFTEX.COM
NBFC BASIS • Non-banking financial and investment companies operate as an important adjunct to the banking sector in financial intermediation. • They provide support to the capital market through investment holding, share trading and merchant banking activities
NBFC BASIS • The activities of non-banking financial companies (NBFCs) in India have undergone qualitative changes over the years through functional specialization.
NBFC BASIS • The role of NBFCs as effective financial intermediaries has been well recognized as they have inherent ability to take quicker decisions, assume greater risks, and customize their services and charges more according to the needs of the clients.
NBFC BASIS • While these features, as compared to the banks, have contributed to the proliferation of NBFCs, their flexible structures allow them to unbundle services provided by banks and market the components on a competitive basis.
FUNCTIONS FUNCTIONS • A large number of banking services like merger-related procedures, money markets services, retirement planning, loan facilities and underwriting are provided by the NBFCs. • NBFCs undertake shadow banking and are less regulated than banks.
FUNCTIONS FUNCTIONS • NBFCs do not have statuary reserve ratios and can open branches at will. • They have lower reporting requirements and less control over the rates to be charged. These features make them very agile and risky.
ADVANTAGES ADVANTAGES • NBFCs play a major role in the economic development of any nation. • NBFCs facilitate access to credit for semi-rural and rural areas where the reach of traditional banks has traditionally been poor.
ADVANTAGES ADVANTAGES • They help in developing small businesses through local presence and strong customer relationships. • Usually, the loan officers in NBFCs know the end customer.
ADVANTAGES ADVANTAGES • The managers are able to structure their loans appropriately with a strong informal understanding of the credibility of the borrower
MAJOR BENIFITS MAJOR BENIFITS • Lenient conditions for getting a loan in comparison to traditional banks • Approve smaller loan sizes
MAJOR BENIFITS MAJOR BENIFITS • Borrower evaluation based on known history of the business • Single product and dedicated business