NBFCs have become the engines of growth of the Indian economy and are enabling SMEs access capital: MoS Finance Krishanrao Karad | The Financial Express

NBFCs have become the engines of growth of the Indian economy and are enabling SMEs access capital: MoS Finance Krishanrao Karad

Credit and Finance for MSMEs: Due to their reach and technology, NBFCs are seeing a higher credit growth than the commercial banking sector. NBFCs loans grew by more than 10 per cent in the last financial year whereas bank loans rose by just five per cent.

NBFCs have become the engines of growth of the Indian economy and are enabling SMEs access capital: MoS Finance Krishanrao Karad
The Union Minister, Bhagwat Krishanrao Karad was addressing a non-banking financial companies (NBFCs) summit organised by the industry association Confederation of Indian Industry (CII).

Credit and Finance for MSMEs: Minister of State for Finance Bhagwat Krishanrao Karad on Tuesday said that the asset base of non-banking financial companies (NBFCs) has reached over Rs 54 lakh crore as of March 2022, comprising a quarter of the balance sheet of the commercial banking sector, as per a report by the Press Trust of India (PTI). 

Also Read: A number of small businesses want employees to work from office instead of WFH or hybrid: Survey

The Union Minister was addressing an NBFC summit organised by the industry association Confederation of Indian Industry (CII). He said that NBFCs have become the engines of growth of the Indian economy and are enabling small and medium enterprises (SMEs) access capital. 

The shadow banking industry has been in crisis since the fall of the two major NBFCs – Infrastructure Leasing & Financial Services Limited (IL&FS) and Dewan Housing Finance Ltd (DHFL). Their crisis was linked with their ability to mop up lendable funds as banks maintained their distance from them on one side and the Reserve Bank of India (RBI) kept on tightening the regulatory norms around them. It finally brought NBFCs on par with banks in November 2021 when it comes to bad loan recognition. 

NBFCs have helped the MSME businesses grow their operations and create employment in the country. Importantly, due to their reach and technology, they also have a higher credit growth than the commercial banking sector. NBFCs loans grew by more than 10 per cent in the last financial year whereas bank loans rose by just five per cent. 

The minister said that the key reason for the NBFCs success is that they have customised solutions and are innovating for the SME credit landscape.

NBFCs saw their balance sheet size double to 25 per cent of the balance sheet size of the banking sector as of March 2022 from just 12 per cent in fiscal year 2010. The minister said that digitisation and customer service are top factors for their success. 

Hailing NBFCs as a strong alternative to the banking sector, Karad said that they will help bridge the credit gap in the coming years due to their low cost of operations. 

Also Read: Budget 2023: Small businesses seek ‘reservation’ from FM Sitharaman in manufacturing these goods

Abhimanyu Munjal, Chairman of CII’s NBFC forum and Managing Director of Hero Fincorp said NBFCs disbursed almost 60 per cent of their loans digitally in FY22 and have also achieved real-time customer onboarding. Around 11.3 million MSMEs have taken collateral-free loans worth Rs 2.32 lakh crore from NBFCs till June this year, said Munjal. 

The credit demand in the NBFC sector is expected to grow to almost Rs 30 lakh crore in the next couple of years, he added. 

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 23-11-2022 at 06:46:00 pm
Photos
9 Photos
Himachal snowfall: Tourist footfall increases in snow-clad Shimla, other regions of hill state – Pictures inside
5 Photos
PM Modi to inaugurate India’s 8th Vande Bharat Express tomorrow – Here’s all we know about the ultra-modern semi high speed train
6 Photos
2023 Men’s FIH Hockey World Cup opens with fireworks and cultural extravaganza – See Dazzling Photos