NAME: SAKSHI SINGH

CLASS:TYBAF -C

ROLL NO. :34

TOPIC:
COMPARITIVE STUDY OF NON-
BANKING FINANCIAL COMPANIES
IN INDIA

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 1. INTRODUCTION

 INTRODUCTION

Formal financial system consist of four segments, these are financial institutions, financial
markets, financial instruments and financial services. Financial institutions are intermediaries that
mobilize the savings and facilitate the allocation of funds in an efficient manner. Financial institutions
are classified as banking and non-banking financial institutions. Banking institutions are creator of
credit while non-banking financial institutions are purveyors of credit. The Indian financial sector
consists of a wide variety of banking and non-banking institutions which cater to different market
segments.

A nonbank financial institution (NBFI) is a financial institution that does not have a full banking
license and cannot accept deposits from the public. However, NBFIs do facilitate alternative financial
services, such as investment (both collective and individual), risk pooling, financial consulting,
brokering, money transmission, and check cashing. NBFIs are a source of consumer credit (along with
licensed banks). Examples of nonbank financial institutions include insurance firms, venture
capitalists, currency exchanges, some microloan organizations, and pawn shops. These non-bank
financial institutions provide services that are not necessarily suited to banks, serve as competition to
banks, and specialize in sectors or groups.

In the banking segment at the apex level are commercial banks which follow universal banking model.
Next, there is the cooperative banking sector with two different strands. While the three Tier rural co-
operative structure (State/District/grassroots level outfits), takes care predominantly of agriculture and
allied activities; the urban co-operative banking structure provides sector mainly to the small
customers at the bottom of pyramid in urban areas.

For a large and diverse country like India, ensuring financial access to fuel growth and
entrepreneurship is a critical priority. Banking penetration continues to be low, and even as the
coverage is sought to be aggressively increased through programs like the PradhanMantri Jan
DhanYojana, the quality of coverage and ability to access comprehensive financial services for
households as well as small businesses is still far from satisfactory.

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In this scenario, the Non-Banking Finance Companies (NBFC) sector has scripted a story that is
remarkable .In such a situation Non-Bank Financial Companies (NBFCs) are the ones who are largely
involved in serving those classes of borrowers who are generally excluded from the formal banking
sector. NBFCs supplement the role of the banking sector in meeting the increasing financial need of
the corporate sector, delivering credit to the unorganized sector and to small local borrowers. Non-
Banking Financial Companies (NBFCs) are a set of financial service companies that are quite unique
to India in terms of their size and the range of services provided by them.

Non-banking finance companies which are heterogeneous in nature in terms of activity and size are
important financial intermediaries and an integral part of the Indian financial system. NBFCs are
heterogeneous group of finance companies means all NBFCs provide different types of financial
services.

The main advantages of NBFC‟s lie in the lower transaction cost, quick decision making, and
customer oriented tailor made services and prompt provision of these services. They have been able to
carve out a niche for themselves in meeting the credit needs of both wholesale and retail customer.

NBFCs are those types of companies which are not banking companies but engaged in the business
activities related to loan, finance, investment, leasing, hire-purchase and other fund based activities.

These companies are required to comply with the provisions of RBI Act and the rules and directions
thereof, in addition to the provisions of Companies Act, 1956.In order to identify a NBFC, RBI
considers both assets and income pattern of the company as evidence from last audited balance sheet.
A company is treated as NBFC if its financial assets are more than 50% of its total assets and income
from the financial asset should be more than 50% of gross income.

A non-banking institution which is a company and which has its principal business of receiving
deposits under any scheme or arrangement or any other manner, or lending in any manner is also a
non-banking financial company (Residuary non-banking company).however now these RNBC are
asked by RBI to steadily windup their services and currently only 2 RNBC are left to windup their
business.

However, progressively over the years, the exclusiveness between the banks and NBFCs has
somewhat blurred. More recently, NBFCs are competing with banks in providing financial services
such as infrastructure finance and housing finance among others.

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Banks, including co-operative banks, can accept deposits. Non-bank finance companies, which have
been issued Certificate of Registration by RBI with a specific licence to accept deposits, are entitled to
accept public deposit. In other words, not all NBFCs registered with the Reserve Bank are entitled to
accept deposits but only those that hold a deposit accepting Certificate of Registration can accept
deposits. They can, however, accept deposits, only to the extent permissible. Housing Finance
Companies, which are again specifically authorized to collect deposits and companies authorized by
Ministry of Corporate Affairs under the Companies Acceptance of Deposits Rules framed by Central
Government under the Companies Act can also accept deposits also upto a certain limit. Cooperative
Credit Societies can accept deposits from their members but not from the general public. The Reserve
Bank regulates the deposit acceptance only of banks, cooperative banks and NBFCs.

It is not legally permissible for other entities to accept public deposits. Unincorporated bodies like
individuals, partnership firms, and other association of individuals are prohibited from carrying on the
business of acceptance of deposits as their principal business. Such unincorporated bodies are
prohibited from even accepting deposits if they are carrying on financial business.

Nomination facility is available to the depositors of NBFCs. The Rules for nomination facility are
provided for in section 45QB of the Reserve Bank of India Act, 1934. Non-Banking Financial
Companies have been advised to adopt the Banking Companies (Nomination) Rules, 1985 made under
Section 45ZA of the Banking Regulation Act, 1949. Accordingly, depositor/s of NBFCs are permitted
to nominate one person to whom the NBFC can return the deposit in the event of the death of the
depositor/s. NBFCs are advised to accept nominations made by the depositors in the form similar to
one specified under the said rules, viz Form DA 1 for the purpose of nomination, and Form DA2 and
DA3 for cancellation of nomination and change of nomination respectively.

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  DEFINITION

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956
engage in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities
issued by Government or local authority or other marketable securities of a like nature, leasing, hire-
purchase, insurance business, chit business but does not include any institution whose principal
business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than
securities) or providing any services and sale/purchase/construction of immovable property. A non-
banking institution which is a company and has principal business of receiving deposits under any
scheme or arrangement in one lump sum or in instalments by way of contributions or in any other
manner, is also a non-banking financial company (Residuary non-banking company).

STATUTORY DEFINITION UNDER THE RBI ACT

NBFC is defined under sec. 45-I (f) 1 ―non-banking financial company‖ means-
(i) A financial institution which is a company;
(ii) A non-banking institution which is a company and which has as its principal business the
receiving of deposits, under any scheme or arrangement or in any other manner, or lending in
any manner.
(iii)Such other non-banking institution or class of such institutions, as theBank may, with the
previous approval of the Central Government and by Notification in the Official Gazette,
specify.

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  CATEGORIES OF NBFC’S

NBFCs can be categorised into

I. NBFCs accepting public deposit (NBFCs-D) and

II. NBFCs not accepting/holding public deposit (NBFCs-ND).

Residuary Non-Banking Companies (RNBCs) are another category of NBFCs whose principal
business is acceptance of deposits and investing in approved securities. This was LIABILITY based
classification

Since there are large number of NBFC‟s they are regulated by different regulatory bodies/authorities.
Hence they can also be classified according to their regulatory bodies. Most of them are regulated by
RBI while SEBI, IRDA, MCA, NHB and STATE GOVERNMENT also regulate some NBFC‟s.

Companies which do financial business but are regulated by other regulators, are given specific
exemption by the Reserve Bank from its regulatory requirements, such as, registration, maintenance of
liquid assets, statutory reserves, etc.

However there are large number of NBFC, major NBFC‟s are the ones which are regulated by the RBI
which are considerably larger as compared to other NBFC‟s which are more important and key drivers
of the sector

NBFC‟s can also be categorized depending on their SIZE i.e. ASSETS

NBFC‟s with asset size of more than 500 crore are considered to be SYSTEMICALLY
IMPORTANT. The rationale for such classification is that the activities of such NBFCs will have a
bearing on the financial stability of the overall economy.

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  CLASSIFICATION ON THE BASIS OF REGULATORY BODY

However there are large number of NBFC, major NBFC‟s are the ones which are regulated by the
RBI which are considerably larger as compared to other NBFC‟s and key drivers of the sector.

1. Regulated by RBI (CURRENT SCENARIO).

 Asset Finance Company (AFC).

 Systemically Important Core Investment Company (CIC-SI).
 Infrastructure Finance Company (IFC).
 Infrastructure Debt Fund (IDF).
 Micro Finance Institution (MFI).
 Investment Company (IC).
 Loan Company (LC).
 Factors.(FC)
 Residuary Non-Banking Companies (RNBC)

Prior to 6 December, 2006 NBFC were classified into 4 TYPES namely

 Equipment Leasing Company

 Hire Purchase Finance Company
 Loan Company
 Investment Company

After 6 December 2006 they were classified as

 Asset Finance Company (AFC)

 Investment Company (IC).
 Loan Company (LC).

NBFC CIC were introduced in April 2010, NBFC-IFC were introduced in February 2010,
NBFC-IDF was introduced in 2012, NBFC-Factors was introduced in September 2012

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2. Regulated by NHB

 Housing Finance Company (HFC).

3. Regulated by SEBI

 Merchant Banking Companies

 Venture Capital Companies
 Stock Broking Companies
 Mutual funds

4. Regulated by MCA

 NIDHI Companies

5. Regulated by State Government

 Chit Fund

6. Regulated by IRDA

 Insurance Companies

i.e. Life insurance Companies, General insurance Companies & Reinsurance Companies.

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 NBFC STRUCTURE

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  NECESSITY OF NBFC’s

The Reserve Bank of India expert committees identified the need of Non-banking financial
companies in the following areas:

 Development of sectors like transport and infrastructure

Banks provide a limited amount of loans and especially in case of large infrastructure projects
the bank may not be able to pay huge amount which the NBFC can give being specializing in
it with large funds

 Substantial employment generation

NBFCs help in both direct and indirect employment generation. They have employed many
persons to man their offices. Besides office staff, institutions need the services of experts
which help them in finalizing lending proposals.

 Major thrust on semi-urban, rural areas and first time buyers

Since the reach of banks is limited to urban areas they are a major sources of loans and other
finance and investments is semi-urban and rural areas. Moreover the procedures are also
lengthy in banks but NBFC‟s provide tailor made services which differ from customer to
customer

 To finance economically weaker sections.

The objective of financial inclusion is to be achieved which says providing financial
assistance to the unattended or under attended which are mostly the people of economically
weaker sections

 Huge contribution to the state

There are some NBFC‟s established by the state governments which help in development
of the people of the state and it also helps the state government to sell bonds and debentures
issued by the state government for funds

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  RESPONSIBILITIES OF NBFC

 Intermediary:
They collect the savings of the people and lent to various parties like household, firm, small
enterprises on sustained basis. In this ways they bring the savers and lenders together and this
help in mobilizing resources in the economy.

 Help the Central, state and local government:

NBFCs helps the local bodies by purchasing their bonds and by selling and
purchasing the securities of the government.

 Employment generation:
NBFCs help in both direct and indirect employment generation. They have employed many
persons to man their offices. Besides office staff, institutions need the services of experts
which help them in finalizing lending proposals.

 Specialized Credit Requirements:
NBFCs provide various types of loans and financial services which are of special nature and
differ from customer to customer. Banks cannot meet their requirements as they are having
lending policies confirming to the banking legislation.

 Capital formation:
NBFCs help in mobilizing savings in very remote and unbanked areas and thereby contribute
to the capital formation of the economy. Investment activity of NBFC sector comprises around
16% of their total assets. These constitute mainly investments in capital market. There are
specialized NBFCs that are exclusively engaged in capital market investment i.e. trading in
securities. These NBFCs therefore help in giving liquidity to the capital market.

 Financial inclusion:
Financial inclusion has been defined as the ―provision of affordable financial services‖ to
those who have been left unattended or under-attended by formal agencies of the financial
system. NBFC‟s have helped in achieving this to a great extent by reaching the rural
areas which the banks were not able to reach out especially AFC & MFI.

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  ASSET LIABILITY COMPOSITION

 Liabilities of NBFC’s
Owned funds (23%oftotal liabilities),debentures (32%),bank borrowings
(21%),deposit(1%),and borrowings from Financial Institutions(1%),Inter-corporate
borrowings (2%),Commercial Paper(3%),other borrowings(12%),and current
liabilities& provisions(5%).

 Assets of NBFC’s

Loans &advances(73%oftotalassets), investments(16%),cashand

Bank Balances(3%),other current assets(7%)and other assets(1%).

 MAJOR NBFC’s

 ASSET FINANCE COMPANY

An AFC is a company which is a financial institution carrying on as its principal business the
financing of physical assets supporting productive/economic activity, such as automobiles, tractors,
lathe machines, generator sets, earth moving and material handling equipments, moving on own
power and general purpose industrial machines. Principal business for this purpose is defined as
aggregate of financing real/physical assets supporting economic activity and income arising there
from is not less than 60% of its total assets and total income respectively.

Asset finance companies are the ones which are in the business of financing physical asset which
is mostly in the form of leasing and hire purchase.

Talking about the niche sectors that NBFCs cater to, vehicle financing especially second hand
vehicles need special mention Asset Finance Companies have gained expertise in this segment and
play a significant role in providing a livelihood to customers who are drivers. From the Reserve
Banks side, to encourage the productive activity that these NBFCs are engaged in, AFC‟s have
accorded certain additional dispensations to them in the form of enhanced bank credit, higher
exposure norm ceiling by the RBI.

Asset finance companies fall under the category of NBFC-D i.e. Deposit accepting NBFC.

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They have to follow the regulations of RBI of accepting deposits.

There is a ceiling on acceptance of Public Deposits by AFC authorized to accept deposits. An

AFC maintaining required minimum NOF, /Capital to Risk Assets Ratio (CRAR) and complying
with the prudential norms can accept public deposits

An exception is made in case of unrated AFC with CRAR of 15% which can accept public deposit
without having a credit rating up to a certain ceiling depending upon its Net

Owned Funds. AFC may get itself rated by any of the five rating agencies namely, CRISIL, CARE,
ICRA and FITCH, Ratings India Pvt. Ltd and Brickwork Ratings India Pvt. Ltd The symbols of
minimum investment grade rating of the Credit rating agencies are:

Category of NBFC having minimum Ceiling on public deposit

NOF of Rs 200 lakhs

AFC with CRAR of 12% and having minimum

investment grade credit rating 4 times of NOF

AFC* maintaining CRAR of 15% 1.5 times of NOF or Rs 10 crore

without credit rating whichever is less

Name of rating agencies Nomenclature of minimum

investment

grade credit rating (MIGR)

CRISIL FA- (FA MINUS)

ICRA MA- (MA MINUS)

CARE CARE BBB (FD)

FITCH Ratings India Pvt. Ltd. tA-(ind)(FD)

Brickwork Ratings India Pvt. Ltd. BWR FBBB

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GRAPH : ASSET FINANCING BY AFC

AT PRESENT, there are 442 AFC’s registered with RBI

Category Of Nbfc Having Nof More Than Revised Ceiling On Public Deposits
Rs 25 Lakh But Less Than Rs 200 Lakh

Afcs Maintaining CRAR Of 15% Without Equal To NOF

Credit Rating

Afcs With CRAR Of 12% And Having 1.5 Times Of NOF

Minimum Investment Grade Credit Rating

The Most Prominent And Market Leading Afc Is Shriram Transport Finance Company Limited

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  INVESTMENT COMPANY(IC)

IC means any company which is a financial institution carrying on as its principal business the acquisition of
securities, Investment companies assumes different shapes and performs different activities, although their
sole objective is to invest the collected funds in securities on behalf of their clients. Generally these
companies do investment and manage portfolio and are licensed by SEBI as portfolio managers.

 LOAN COMPANY (LC)

LC means any company which is a financial institution carrying on as it s principal business the providing of
finance whether by making loans or advances or otherwise for any activity other than it s own but does not
include an Asset Finance Company. These companies can accept deposits and even these companies need to
get a credit rating from a credit rating from any credit rating agency and have a ceiling on accepting of
deposit.

 INFRASTRUCTURE FINANCE COMPANY (IFC)

Infrastructure finance means a credit facility extended by NBFCs to a borrower for exposure in the
following infrastructure sub-sectors

IFC is a non-deposit accepting (NBFC-ND) loan company which has to comply with the following
rules and regulations of the RBI

 A minimum of 75 per cent of the total assets of an IFC-NBFC should be deployed in infrastructure
loans;

 The company should have minimum net-worth of Rs 300 crore,

 The CRAR of the company should be at 15% with Tier I capital at 10%

 The minimum credit rating of the company should be at 'A' or equivalent of CRISIL, FITCH, CARE,
ICRA, BRICKWORK or equivalent rating by any other accrediting rating agencies.

Their request must be supported by a certificate from their Statutory Auditors confirming the asset pattern
of the company as on March 31, of the latest financial year.

By financing infrastructure projects, NBFCs broaden capital formation of the country and thereby contribute
to the overall economic growth and development of the country.

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GRAPH : LENDING TO INFRASTRUCTURE SECTOR

The quantum of infrastructure finance provided by the NBFC sector witnessed a CAGR of 26.2 per cent
during the period between March 31, 2010 and March 31, 2013. In absolute terms, NBFC finance to
infrastructure increased from Rs.2228 billion on March 31, 2010 to Rs. 4479 billion as on March 31, 2013.It
has doubled in 4 years

The TOP 5 IFC’s include IDFC, REC, IL&FS, PFC, SREI Infrastructure Finance Ltd.

 FACTORS

NBFC-Factor is a non-deposit taking NBFC engaged in the principal business of factoring. The financial
assets in the factoring business should constitute at least 75 percent of its total asseAuets and its income
derived from factoring business should not be less than 75 percent of its gross income.

The Factoring Act, 2011 defines the „Factoring Business‟ as ―the business of acquisition of receivables of
assignor by accepting assignment of such receivables or financing, whether by way of making loans or
advances or in any other manner against the security interest over any receivables‖. However, credit
facilities provided by banks in the ordinary course of business against security of receivables and any
activity undertaken as a commission agent or otherwise for sale of agricultural produce or goods of any
kind whatsoever and related activities are expressly excluded from the

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definition of Factoring Business. The Factoring Act has laid the basic legal framework for factoring in
India.

Every company registered under Section 3 of the Companies Act 1956 seeking registration as NBFC-
Factor shall have a minimum Net Owned Fund (NOF) of Rs. 5 crore. Existing companies seeking
registration as NBFC-Factor but do not fulfil the NOF Criterion of Rs. 5 crore may approach the Bank for
time to comply with the requirement.

At Present there are only 4NBFC-FACTORS registered with RBI namely IFCI Factors
Ltd. (Formerly Foremost Factors Limited) India Factoring & Finance Solutions Pvt Ltd

SBI Global Factors Ltd. [Formerly: Global Trade Finance Limited] Canbank
factors Limited

 GROWTH OF NBFC’s

PRE-LIBERALISATION :

th
NBFC‘s in India could be traced back to the beginning of the 20 century when Mutual Benefit Companies
(NIDHI‘s) used to function to help the have not of the society. There were also the chit funds which use to
function where a group of people used to invest some amount known as chits. However these used to work
in a particular locality and were very limited and small in size as they were not regulated. Later on the
concept of NBFC‟s widened during the 60‟s.Now NBFC‟s started in small way in 1960-70s and tried to
serve the needs that couldn‘t be fulfilled by banks. In the early years, the operations of NBFC‟s were limited
and did not have a significant impact on the financial system; which did not make them get attention.

POST LIBERALISATION :

NBFC sector clocked phenomenal growth in the last 20 years. The sector on an average, witnessed a
Compound Annual Growth Rate (CAGR) of 22 per cent during the period between March 2006 and
March 2013. Most of the years, NBFC sector grew faster than banking sector.

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GRAPH : BALANCE SHEET GROWTH

Credit growth in NBFC - grew more rapidly as compared with the banking sector. NBFC credit witnessed a
CAGR of 24.3 per cent during the period between March 2007 and March 2013 as against 21.4 per cent by
the banking sector.
Although Indian economy is slowing down in the recent past, the robust NBFC credit growth is largely on
account of significant growth in infrastructure credit and retail finance.

 REGULATORY FRAMEWORK (AS REVISED 2014)

1.Requirement of Minimum NOF of Rs. 200 lakh :

NBFCs are required to obtain a Certificate of Registration (CoR) from the Bank to commence/carry on
business of NBFI in terms of Section 45-IA of the RBI Act, 1934. The said section also prescribes the
minimum Net Owned Fund (NOF) requirement. In terms of Notification No.DNBS.132/CGM(VSNM)-99
dated April 21, 1999, the minimum NOF requirement for new companies applying for grant of CoR to
commence business of an NBFC is stipulated at Rs. 200 lakh. Although the requirement of minimum NOF
at present stands at Rs. 200 lakh, the minimum NOF for companies that were already in existence before
April 21, 1999 was retained at Rs. 25 lakh.


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2.Deposit Acceptance :
As per extant NBFCs Acceptance of Public Deposit (Reserve Bank) Directions, 1998, an unrated Asset
Finance Company (AFC) having NOF of Rs. 25 lakh or more, complying with all the prudential norms and
maintaining capital adequacy ratio of not less than fifteen per cent, is allowed to accept or renew public
deposits not exceeding one and half times of its NOF or up to Rs. 10 crore, whichever is lower. AFCs which
are rated and complying with all the prudential regulations are allowed to accept deposits up to 4 times of
their NOF.

It has been decided to harmonize the limit for acceptance of deposits across the sector by reducing the same
for rated AFCs from 4 times to 1.5 times of NOF, with effect from the date of this circular.

3.Systemic Significance :

With this revision in the threshold for systemic significance, NBFCs-ND shall be categorized into two broad
categories viz.
 NBFCs-ND (those with assets of less than Rs. 500 crore) and

 NBFCs-ND-SI (those with assets of Rs. 500 crore and above).

4.Multiple NBFC’s :

The definition of the word ―group‖ will be the same as per Accounting Standards. ―Companies in the
Group‖, shall mean an arrangement involving two or more entities related to each other through any of the
following relationships:
 Subsidiary – parent (defined in terms of AS 21),

 Joint venture (defined in terms of AS 27),

 Associate (defined in terms of AS 23),

 Promoter - promote [as provided in the SEBI (Acquisition of Shares and Takeover) Regulations,
1997],

 For listed companies, a related party (defined in terms of AS 18), common brand name, and
investment in equity shares of 20% and above.

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5.Prudential Norms :

 They shall not be subjected to any regulation either prudential or conduct of business regulations
viz., Fair Practices Code (FPC), KYC, etc., if they have not accessed any public funds and do not
have a customer interface.
 Those having customer interface will be subjected only to conduct of business regulations including
FPC, KYC etc., if they are not accessing public funds.
 Those accepting public funds will be subjected to limited prudential regulations but not conduct of
business regulations if they have no customer interface.
 Where both public funds are accepted and customer interface exist, such companies will be subjected
both to limited prudential regulations and conduct of business regulations.
 Irrespective of whichever category the NBFC falls in, registration under Section 45 IA of the RBI
Act will be mandatory.
 All of the above will also be subjected to a simplified reporting system which shall be communicated
separately.

 should be on the lines of the Guidelines contained.

 A declaration and undertaking shall be obtained from the Directors by the NBFC, the draft of which
is given.
 In addition, the Directors shall sign a Deed of Covenant as given.
 NBFCs shall furnish to the Reserve Bank a quarterly statement on change of Directors certified by
the auditors and a certificate from the Managing Director that fit and proper criteria in selection of
directors have been followed. The statement must reach the Regional Office concerned of the
Reserve Bank within 15 days of the close of the quarter.









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 

2. REVIEW OF LITERATURE(ROL)

An attempt is being made in this chapter to review the literature concerning the growth, organization and
performance of the NBFCs in India. This gives an opportunity to know the contributions of authors and
scholars in the field. This may help us in assessing the relevance of their contributions for this study.

Verma (1997)

In his book "Concept, Practice and Procedure of Non-BankingFinancial Companies" throws light on the role
of NBFCs in various sectors of the economy and examines their contributions to the economic growth of the
country by serving as king-pins in the financial system of the Indian Economy. The author examines the
engagement of these NBFCs in various activities rendering both fund based services including lease finance,
hire purchase finance, consumer finance, working capital loans, inter corporate investment, bill discounting,
factoring, venture capital financing, mutual funds, housing finance etc, and the non-fund based services
which include managing mergers, amalgamations, lease broking, corporate counselling and capital
restructuring, project counselling, credit rating , managing fixed deposits, money market operations,
dealings in foreign exchange, money charging and doing other business for the depositors etc. This work
explains the structure, regulation and operations of NBFCs in India in a systematic manner elaborating laws
applicable to NBFCs, practices and procedures in vogue in NBFCs. The work, though rich and valuable
does not help us in understanding the particularproblems faced by most of the NBFCs in the market for the
last 5 to 6 years and fails to examine the main causes of failure of NBFCs working in India

Sarkar and Agrawal (1997)

In their work "Banking :The Challenges ofDeregulation' refer to the financial sector reform in India and the
role of non-bank financial intermediaries in the mobilization of funds. The authors refer to the creation of a
competitive environment both for the banks and the NBFCs as well.

Kuchhal (1998)

In his work "Corporate Finance" examines the working of thefinancial sector of the Indian economy during
the last one decade after the reforms were introduced. The author provides a comprehensive and critical
analysis of new developments affecting the various spheres of corporate finance and in that context analyses

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financial sector reforms, Corporate Securities, Marketing of Securities, Merchant Banking, Non-Bank
Finance Companies, Credit Rating Agencies, Capital Market, Stock Exchange, OTC Exchange in India,

Public Deposits, Foreign Capital and Collaborations, Unit Trust of India, Development and Finance Co-
operations. The book may also be used as a supplement to my financial management. Though the work
offers a comprehensive and critical review of the Indian financial sector, its study of the Non-Bank Finance
Companies provides only the basic concepts about NBFCs and the Regulation Act of RBI relating to these
companies. The author makes no contribution to further our understanding of NBFCs and their working
either at the national level or at the state level.

Pandey (1999)

In his work "Venture Capital" examines the developmental role andthe factors contributing to the venture
capital in India. The work presents a detailed case analysis of the Venture Capital experience in India by
examining -
The strategic role of Venture Capital in the development of technology innovative entrepreneurship and
small enterprises in India.
The development process of Venture Capital by a systematic analysis of the practices and policies adopted
in India.
The policy initiative necessary for the success of ‗Venture Capital‘ in developing countries based on
the Indian experience.

The work is very useful to understand an important segment of India's emerging financial system, that is,
Venture Capital. This, however, does not help us in relating this experience to the organizational and
operational aspects of the NBFCs in India.

Khan (1999)

In his work "Financial Services" examines the various financialservices provided by Non-Banking
Financial Companies in the Indian market. The efficiency of any financial system to an extent also depends
upon the quality and range of financial services provided by the Non-Banking Financial Companies.
Although some of these services in India are at a nascent stage, they represent development of considerable
significance for the financial system.

Khan discusses about the non banking financial companies/intermediaries which provide the services as
well as their users, the legal procedures, tax and accounting procedures. In fact the work provides a
judicious mixture of theory and business practices of the contemporary Indian Financial Services sector. It

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also gives an overview of Non-Banking Financial Companies within the framework stipulated by RBI Act
and RBI directions.

Though this is an excellent effort to understand the financial market of the Indian economy and different
services provided by the financial sector of the Indian economy, it does not give any idea about the
peculiar problems faced by the NBFCsin different places of the country. The financial market is not
uniform in the country.In some places "the NBFCs are doing good business and in other places their
performance is very poor. The work does not offer us any insight about the working of the NBFCs and
their problems in our state

Rao (2000)

In 'India's Financial System : Liberalisation and Reform' refers to the'widening and deepening' of the
financial sector in India and in that context examines financial reforms following the recommendations of
the Chakravarty Committee Report (1985) and the Narasimham Committee Report (1991). While many of
the important issues like the Asset-Liability Management (ALM), Asset-Reconstruction Fund (ARF),
Prudential Supervision, Systemic Stability and the Capital Market etc have been discussed in the paper,
there is, however, no discussion of the emergence of NBFC in the Indian Financial market after the
launching of economic reforms in 1991.

Tadas (2000)

In his paper 'Structure and Growth of India's Financial Sector' has notmade any discussion relating to the
growth and functioning of NBFCs in the Indian financial market.

Tadas (2000)

In another paper 'Output and Productivity in India's Financial Sector',however, looks at the non-banking

financial institutions as a part of the banking and insurance sector and attempts an estimation of value

addition by the Non-Banking Financial Companies and Corporations.

Gordan and Natarajan (2003)

In their work "Financial Market and Services" lookat the developments in the financial market and relate
these developments like the financial innovations in terms of products and instruments, adoption of modern
technologies, opening up of the market to the global economy and streamlining ofthe regulatory framework

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etc to the working of India's financial market. The work is exhausting as it deals with the (i) The financial
system in India, (ii) Money Market,

(iii) New Issues Market, (iv) Secondary Market, (v) Securities and Exchange Board of India (vi)
Depository System.

The work also throws light on (i) FinancialsServices (ii) Merchant Banking (iii) Hire Purchase (iv) Leasing
(v) Venture Capital (vi) Mutual Funds (vii) Discounting factoring and forfeiting and (vii) Credit Rating.
The work does not devote much space or writing to study the working of NBFCs in the fast changing
financial situation in India.

Stijn (2005)

In his paper 'How Important are Financial Markets in Spurring Growthand Investment?' examines the
catalytic role of the financial markets in promoting development. The role of NBFCs in particular has not
been examined.

Economic Times (29.04.1998)

Highlights the need to have a strong regulatoryframework for NBFCs and in that light feels the creation of
compulsory deposit insurance scheme for NBFCs by government and strengthening of the Securities and
Exchange Board of India's powers so that it can award damages to investors who are victims of the
malpractices of capital market intermediaries like the NBFCs.

Economic Times (09.06.1998)

While speaking about the failure of JVG Financerefers to the efforts of the RBI to start criminal activities
against the group's chairman Mr. V.K. Sharma and three directors for gross violation of Non-Banking
Financial Company Rules and allegedly taking the public for a ride.

The company is accused of collecting Rs. 88.87 crores while it was eligible to collect only Rs. 3 crore. The
company's Net Owned Fund (NOF) was Rs. 11.33 lakh with inter corporate deposits (ICDs) worth Rs. 1.51
crore.
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Economic Times (05.05.2000)

Discusses the decision of the Reserve Bank ofIndia in raising the minimum net worth required by NBFCs

for registration with RBI from Rs. 25 lakhs to Rs. 2 crores.

Economic Times (16.11.2001)

Gives relevant data on fund mobilization by a stateowned NBFCs [West Bengal Government owned
finance company]. The article not only gives data on total public deposits mobilized by this state owned
company but also gives data about the total outstanding public deposits mobilized by NBFCs sector in
India.

Economic Times (April, 2002)

Throws light on revision of RBI regulatory normsrelating to the NBFCs. The RBI has decided to introduce
changes in norms for accounting for investment and provisioning against non-performing assets (NPAs) in
response to advise received from the Institute of Chartered Accountants of India. The Reserve Bank of India
has also prohibited NBFCs for extending fresh loans and making new investments in case of default in
repayment of public deposits.

RBI yearly Bulletin (2001)

Examines the business of the NBFCs in the country asa whole and then gives data on region wise
composition of deposits held by NBFCs, asset profile of NBFCs, distribution of assets of NBFCs according
to activity, Net owned funds of NBFCs and capital adequacy ratio. This helps the scholars and investigators
considerably. But to examine the working of NBFCs in a specific region or state, the data given are not
enough.

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 3. OBJECTIVES OF NBFC

The inner control of a non-banking financial institution can be defined as being a ceaseless process to
which the board council participates, as well as the managers, the staff, by which is given a reasonable
endurances to attain the following targets: the development of activity in conditions of efficiency; the
supply of credible information, relevant, complete and timely to the structures implied in taking decisions
inside the non-banking financial institution with the legal framework and the proper regulations.

In order to achieve its targets, the inner control organized inside the non-banking financial institutions must
be structured and stressed as organizing and functioning, on at least the following elements: the recognition
of role and responsibility of the board of directors as well as the managers of non-banking financial
institution; identification and evaluation of significant risks; activities of control and separation of
responsibilities; information and communication between the functional structures of non-banking financial
institution; monitor zing and correction of deficiencies.

 Greater Employment Opportunities and Standard of Living

NBFCs help attain the objective of macroeconomic policies of creating more jobs in the country by
promoting SMEs and private industries through lending them loans. This increase in new businesses
consequently raises the demand for manpower and creates employment. Furthermore, the Purchasing
Power Parity (PPP) of people rises and so does their standard of living.

 Strengthening of Financial Market

The financial market relies heavily on Non-banking financial institutions for raising capital. The start-ups
and small-sized businesses are dependent on funds offered by NBFCs and also in order to maintain
liquidity. For an effective functioning and balance in the financial market, NBFCs play a significant role.

 Supplying long-term credits

Unlike the regular banks, NBFCs extend long-term credits to infrastructure, commerce and trade
companies. The traditional banks expect timely, schedules and short-term repayment of loans that may not
always suit the requirements of these industries. NBFCs, on the other hand, fund large projects and so
promotes economic growth. They also allow industries to participate in equity.

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  Mobilisation of Funds

Non-banking financial companies help in rotation of resources, asset distribution and regulation of income
to shape the economic development. They enable converting saving into investments and thus helps in the
mobilisation of funds/resources in the economy.

 Growth of National Income

As NBFCs aim to build capital for several industries – private and otherwise – they aid in accumulating a
capital stock for the country. This directly adds on to the national income and results in the progression of
Gross Domestic Product (GDP).

 Provides Long-Term Credits

NBFCs facilitate lengthy credit periods to suit the long term financial needs of the commerce, trade,
infrastructure and construction companies, for accomplishing massive projects.

 Movement of Funds:

NBFCs are always good for the economy since it mobilizes the funds by transforming the savings
into investments and utilizing these funds to provide loans to the companies.

 Better Living Standard:

With the growth of industrialization and loans provided by the NBFCs increases the purchasing power
of the individuals, ultimately enhancing the standard of living.

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 4. HYPOTHESIS
 NBFC’s CRISIS

The non-banking financial companies (NBFC) crisis is being held up as one of the culprits of the
current slowdown. There is a near consensus that this crisis was triggered by the collapse of
Infrastructure Leasing and Financial Services Ltd (IL&FS) and the unfolding of the problems of
Dewan Housing Finance Corporation Ltd (DHFL). However, should their failure have led to such a
crisis in the sector and impacted the economy as a whole? While both IL&FS and DHFL were large
financial institutions, their collapse did not lead to the crumbling of too many other balance sheets. At
most, some tremors were experienced.

The collapse of an institution impacts the sector and/or the economy only if the institution in question
is too big to fail—that is, it is systemically important—and there is a systemic risk festering in its
balance sheet.

IL&FS started as a lending and leasing institution for infrastructure. Over time, it expanded to other
financial services and beyond, such as investment banking, mutual funds, broking, depository
participation, securities services, education and training, and spread its tentacles abroad. In 2010-11, it
transformed its business model vis-à-vis projects from develop-build-and-transfer to develop-build-
own-and-operate. However, its balance sheet was not restructured.

DHFL started as a mortgage lender. It also spread its canopy to insurance and mutual funds. Its
balance sheet had long-term assets while its liabilities were to be repaid in the short-term. At the time
of its collapse, it was at least 40% short of the assets needed to generate funds for near-term
repayments.

IL&FS and DHFL, with their businesses spread across various segments of financial services, were
subject to different sectoral regulators, including the Reserve Bank of India, Securities and Exchange
Board of India, National Housing Bank and the Insurance Regulatory and Development Authority of
India. Their balance sheets were hiding asset-liability mismatch risks. While IL&FS, after changing its
business model, could not borrow long, DHFL took advantage of market liquidity at the time by
borrowing short and lending long to enhance its margins.

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Investopedia describes systemic risk as ―the possibility that an event at the company level could
trigger severe instability or collapse of an entire industry or economy".

The question arises whether the asset-liability mismatch problems of these two companies alone could
have become a systemic risk. Possibly not. In fact, the entire NBFC and housing finance company
(HFC) sectors had such a mismatch—of over 35%. This became a low-lying systemic risk.

After demonetization, a big part of Indian cash moved into bank deposits, mutual funds, deposit-taking
NBFCs and the stock market. Flooded with short-term money, many institutions started lending it to
NBFCs, HFCs and companies via commercial deposits (CDs) and commercial paper (CPs) at interest
rates ranging from 6% to 6.5%. With long-term borrowing rates ranging from 10% to 14%, depending
on the rating of the paper, borrowing short provided an extra margin of 4% to 8%. As of 31 August
2018, mutual funds were holding more than ₹2.25 trillion of CPs/CDs issued by NBFCs and HFCs
alone.

The ―twin balance sheet" challenges provided NBFCs a huge opportunity to lend money to real estate
developers, small businesses and individuals. Their share of lending went up significantly post
demonetization. They capitalized on conditions by lending more and boosting liquidity, which helped
expand operations and improve profitability. As a result, their valuations skyrocketed.

The blow-up in the balance sheets of IL&FS and DHFL brought a low-lying systemic risk to the fore
and hurt industry-wide lending. Short-term lenders grew reluctant to issue fresh loans or rollover
existing ones, and even demanded early redemption. The market cried out for liquidity.

The moot question, though, is whether the regulatory framework recognized the low-lying systemic
risk and whether it was prepared to deal with it.

In case of low-lying systemic risk, regulators have to exercise a choice on when to act. The choice is
between taking pre-emptive action or keeping gun powder ready to deal with the risk whenever it
materializes, while letting the economy make the most of the conditions in the meantime. Pre-emptive
action is often cast as a ―party-pooper" by markets and castigated. In this particular instance, whether
regulators could have acted differently remains a matter of debate.

Systemic risks can be broadly classified as cross-sectional and time-dimensional risks. Regulators
craft policies to limit externalities, so as to minimize the adverse impact of common exposure arising
from various inter-linkages. If time-dimensional risks materialize, however, regulators insist on capital
enhancement and higher margins of safety.
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The asset-liability mismatch of NBFCs was a time-dimensional systemic risk. Higher capital adequacy
requirements and balance sheet liquidity enhancements could have reduced the risk, and the mismatch
could steadily have been addressed. Unfortunately, the music stopped suddenly.

Raising capital adequacy limits and liquidity margins for NBFCs might have tempered their
profitability and hurt their valuations, but would not have deprived the economy of credit. Investors in
NBFCs would not have lost so much on their collapse. Alacrity in taking adequate measures could
have spared them the devastation.

 SHRIRAM TRANSPORT FINANCE COMPANY LIMITED

 ABOUT THE COMPANY

Shriram Transport Finance Company Limited (STFC) is the flagship company of Shriram Group – a
diversified group with interests in financial services, manufacturing, value added services, project
development, engineering Services, etc.Shriram Transport Finance CompanyLimited operates as an
asset financing non-bank financial company that provides finance for the commercial vehicle industry
in India. Shriram Transport Finance Company Limited was founded in 1979 and is headquartered in
Mumbai India.

It finances for pre-owned and new heavy duty trucks medium and intermediate light duty trucks
pickup and mini trucks passenger vehicles farm equipment and construction vehicle and
equipment.

Shriram Transport Finance Co Ltd also offer tyre finance, engine replacement finance,
cobranded credit cards and freight bill discounting products as well as accepts various deposits
comprising non-cumulative and cumulative deposits.

In addition it offers facilitation services for disposal of pre-owned used and repossessed refurbished
vehicles and farm agriculture construction and industrial equipment machinery of various types and
categories through approximately 50 Automalls.

STFC has played a credible role in financial inclusion of millions of first time users (FTUs) and
driver-turned-owner (DTO) by offering affordable finance on pre-owned commercial vehicles (CVs).
Presently, the company is driven by 16,000+ motivated entrepreneurs (including ~9,700
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product/credit executives) championing a unique ―relationship-based‖ business model through a pan-
India network comprising 741 branches, 776 rural centers and partnerships with ~500 private
financiers.

STFC, being a pioneer in pre-owned CV segment, has institutionalized its expertise in loan
origination, valuation and collection.

STFC‟s subsidiary - Shriram Equipment Finance Company Limited offers affordable financing of
pre-owned and new construction equipment; another subsidiary ShriramAutomall India Limited
owns, operates and manages Automall to provide facilitation services to potential buyers and sellers
of pre-owned commercial vehicle. It presently operates 50 Automalls across India.

 INDUSTRY ANALYSIS :

The Society of Indian Automobile Manufacturers (SIAM) has reported that domestic sales of
Passenger Vehicles grew by 3.90% during the year April, 2014 - March, 2015 as compared to the year
2013-2014 (last year). The overall Commercial Vehicles sales registered a de growth of 2.83% in
April 2014- March 2015 as compared to the last year. Medium & Heavy Commercial Vehicles
(M&HCVs) registered growth of 16.02% and Light Commercial Vehicles declined by 11.57%. Three
Wheelers sales grew by 10.80% in April 2014 – March 2015 as compared to the last year. Passenger
Carriers and Goods Carriers grew by 12.16% and 5.27% respectively in April 2014- March 2015 as
compared to the last year.

 COMPANY PERFORMANCE :

The company is one of the largest assets financing NBFC with approximately 20-25% market share in
pre-owned and approximately 7- 8% market share in new truck financing.
Shriram Transport Finance Company Limited is the largest asset financing NBFC with Assets Under
Management (AUM) of Rs. 59,108.28 crore. The company is a leader in organized financing of Pre-
owned trucks having a pan-India presence with a network of 741 branches and partnership with ~500
private financiers, the company has revitalized the pre-owned commercial vehicle industry and
thereby ensured inclusive growth to its strong customer base of over 12 lacs first time users and
driver-turned-owners. The company preferred to strengthen its credit norms and kept a close watch on
delinquencies.
During 2014-15, the total assets under management increased by 11.28% to Rs. 59,108.28 crore.

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The net interest income increased by 12.1% to Rs. 4,112.94 crore. However net profits were lower at
Rs. 1,237.81 crore as compared to Rs. 1,264.21 crore in the previous year mainly on account of
higher provisions and write off.

The company expanded its reach to 741 branches, with addition of 87 new branches this year.

The company`s gross NPAs and net NPAs stood at 3.80% and 0.79% respectively.

REASONS FOR GROWTH :

Various reasons have contributed for the growth of the company since 35 years

 Utmost focus and commitment:

Unlike a bank that has many lines of business, an NBFC is focused only on a narrow slice of
the market. STFC‟s focus is almost entirely on used truck finance. This segment is large
(almost as large as the new truck finance market), and is growing rapidly. Being a market
leader in such a segment is naturally an advantage. The knowhow that it has built in this
business is not just its key strength, but is also a big entry barrier for competition. However,
STFC has persisted because it knows the dynamics of the market. It has stayed the course for
over 30 years, waiting for, and capitalizing on the opportunities along the way. Without its
commitment to the business model and unwavering faith on its future, it may have changed its
line of business and strayed into the segments dominated by other players, such as new truck
finance to fleet operators.

 Meeting customer needs:

It is a truism that if you focus on meeting customer needs, everything else will follow. STFC
has remained focused on all the needs related to truck finance, including loans for replacing
tyres
Most of its borrowers do not operate a bank account. This increases the risk as it makes
the collection process substantially more difficult.
STFC has evolved methods of collection that are in line with its customer‟s own earning
and collection cycle.
Most truckers operate on a fixed route and get paid after they deliver the goods. After paying
for fuel and other expenses related to running the truck, they pay the EMI through cash. They
are visited by STFC‟s field officers who collect mostly before 8 am, when their customers are

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 available. Also, a monthly instalment may be paid over several instalments spread over the
month. Though this makes its collection costs higher than other asset financing NBFCs, it
increases customer loyalty.

 Lower employee turnover :


Field officers are trained by the branch managers in the tricks of the trade, and they can expect
to become branch managers themselves over 8-9 years. ―Every person that we employ we
train from grounds-up, and he or she learns to handle the portfolio independently. We
normally set up a branch near the place where a field officer has built the business. This is
how branches have grown,‖

After an employee is recruited, he is straightaway put into a branch where he is attached to a

field person and over the first six months is trained to handle every activity including
evaluation of the vehicle, repossession, contracting, accounting, and importantly, is
encouraged to learn driving. He is then given a small portfolio of 20-30 contracts to manage,
and is expected to build his own portfolio and therefore, his own relationships.

The company is not among the best pay masters, but variable compensation can be quite high
for best performers. The model encourages people to stay longer in the firm, as there is no
glass ceiling and they can rise to the highest level in the company. As a result, the level of
employee turnover is quite low- at the senior management level, at less than 1 per cent, and at
the junior level, it is about 6-7 per cent.

 Lower NPA’s :
Though there is a very strong incentive for its borrowers not to default, there is no substitute
to carefully evaluating borrowers before giving them a loan. As a rule, STFC requires its
existing customers to introduce a prospective one and stand guarantee for him. Truck
operators normally operate in a group on the same route. The prospective borrower usually
plans to operate on the same route as the proposer. STFC‟s field officers keep in regular touch
with them and this keeps the rate of delinquency low. ―Peer pressure works in this community
model of lending. In cases where it appears that the borrower will not be able to use the asset
for income generation, he is advised to sell it to someone who can. Only in rare cases is a
vehicle re-possessed or the guarantor asked to pay up. Unlike many personal vehicle finance
companies the difficult job of re-possession is done by its own staff members.

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 Customer loyalty :
It gets a lot of repeat business from its existing clients, in addition to referral business.
According to reports, between 30 and 40 per cent of its customers has done business with it in
the past.

Typically, a truck changes hands between three and four times during its useful life. Each
time it changes hands there is an opportunity to finance it. When someone graduates from
being a truck driver to an owner (DTO), he buys a truck that is 8-10 years‟ old. After a few
years of use, he successively trades the older ones for the relatively newer ones of 4-5 years
old and, eventually buying a new truck, at which stage it may or may not go out of STFC‟s
fold.

 Helps non willful defaulters :

In the case of default, it distinguishes between willful act and one arising from genuine
problems, such as an accident. In the case of the latter, all assistance is provided to the
borrower to tide over the crisis and start earning again. This not just makes sure that the rate
of default is kept low, but it also strengthens its relationship with its customers, which is the
biggest cushion in times of a slowdown

 Skilled & Proper cost and credit-worthiness assessment :


The ability to assess the credit worthiness of the borrower and the value of the asset are core to
STFC`s success, and therefore, these are done internally. Its knowledge gathered from
financing lakhs of trucks over the years, is codified in tables and grids based on a vehicle`s
age, make and type, but all this is indicative. The real differentiator is the skill of its people
who evaluate the vehicle. Employees who join as field officers are trained over three to four
years to assess the condition of the engine by driving the vehicle around. Many times the value
proposed by its staff is substantially lower than that suggested by the grid and this is used as
the basis of offering finance. Similarly, its field officers and branch staff assess the credit-
worthiness of the borrower, based on the guarantor`s credentials and their knowledge.
However, there is another layer of validation to control both these risks.
It has SBUs, each of which is responsible for five to eight branches. All the proposals are
vetted by credit and vehicle experts in these locations. Nearly 5-10 per cent of
theproposals are either rejected or additional information / collateral is sought. This
model allows STFC to scale up as well as manage its risk cost effectively.
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  LIC HOUSING FINANCE
Housing Finance Industry

India‗s housing finance industry comprises of banks and housing finance companies. They
have contributed to new residential home loans at a compounded annual growth rate (CAGR)of more
than 30 percent during the period 2002-2007. This has been due to the combinedeffect of a booming
economy and low interest rates.Further, steady prices and continuation of tax concessions to self-
occupied residential homeborrowers are contributors to the growth of the industry. The average age of
borrowers hasdeclined over the years, while the number of double income households has
grownsignificantly enabling them to borrow higher loan amount due to higher repaying capacity.The
scenario of unprecedented growth in housing finance, driven by low interest rates,increasing
purchasing power and attraction of the yield in this sector has begun to show signsof change last year.
There has been a decrease in demand during the last one year. Earlier tothat i.e., during 2006 to 2007
home prices increased at a CAGR of 30 to 40 percent against a20 percent increment in salaries
witnessed in metros and large cities. This had affected the
buyer‗s affordability.

As the borrowing cost for banks and housing finance companies steadily increased in linewith rising
interest rates in the economy in the past two years up to Q3 of 2008-09, banks andhousing finance
companies resorted to hike in interest rates so as to maintain their interest spreads. Interest rates on
new home loan originations have increased significantly by 200basis points duringApril‗2008to
September October`2008. As a result a higher proportionof monthly income was being paid out as
home loan equated monthly instalments (EMI).The combined effect of an increase in property prices
and interest rates has meant that homeloan buyers, who would have had to borrow less at an interest
rate of 8.75 percent a year ago,now have to borrow more to buy the same property due to higher
property prices at higherinterest rates of 10.5 to 11 percent. This trend has resulted in both lower
affordability i.e., anaverage home at a higher multiple of annual income, and higher debt burden
(meaning that alarger proportion of income gets spent as home loan EMI). Further, the increase in
interestrates on fresh loans to 10.5 to 11 percent from 8.75 percent meant increase in debt burden
i.e.higherinstalment to income ratio. Along with, the economic down turn and
consequentialapprehensions of job insecurity and income reduction led to slump in the market.
However the scenario has taken the reverse turn in the last quarter of the financial year 2008-09,
whichwas evident from the higher booking of flats, and sharp increase in the disbursements. Realestate
developers have taken sensible decision in reducing or slashing rates in major centresspecially
Mumbai, Thane, Navi Mumbai, Delhi NCR and Bangalore to encash on the existingdemand in the real
estate market. The good deals might be offered for a few weeks or for thefirst ten properties or for a

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killer deal for a time-bound two days or similar schemes but yes the writing is clear on the wall that
the willingness to connect with the ―real‖ pricing hasdawned on the developers to sell at reduced
prices to encourage more and more sales. Thesales teams in the builder/ developer offices are at their
all-time creative best with salestactics. They now understand clearly that with buyers unwilling to
relent on unrealisticpricing, there is an even greater need to price competitively, maybe with a lower
profitmargin, than holding on to the price and project as the interest meter runs. These proactivesteps
should ensure renewed demands and increased volumes during the current year.The Indian economy,
which was on a robust growth path up to 2007-08, averaging at 8.9 percent during the period 2003-04
to 2007-08, witnessed moderation in 2008-09, with thedeceleration turning out to be somewhat
sharper in the third quarter. Industrial growthexperienced a significant downturn and the loss of
growth momentum was evident in allcategories, viz., the basic, capital, intermediate and consumer
goods.However, the fiscal stimulus packages of the Government and the monetary easing of
theReserve Bank will, however, arrest the moderation in growth and revive consumption
andinvestment demand, though with some lag, in the months ahead. Furthermore, prospects of the
agricultural sector also remain bright, and this will continue to support the rural demand.Finally, in the
wake of expected improvement in agricultural production as well as lowinternational commodity
prices, inflationary pressures are also anticipated to remain at a lowlevel through the greater part of the
2009-10.

Indian Housing Finance scenario

India‗s housing finance industry comprises of banks and housing finance companies. They
have contributed to new residential home loans at a compounded annual growth rate (CAGR)of more
than 30 percent during the period 2002-2007. The scenario of unprecedented growthin housing
finance, driven by low interest rates and booming economy, has begun to showsigns of change last
year. There has been a decrease in home prices during the last one year.Earlier to that i.e., 2006 to
2008 home prices increased at a CAGR of 30 to 40 percentagainsta 20 percent increment in salaries
witnessed in metros and larger cities. This had affected the buyer‗s affordability. The average home
buyer spent around 4 times his net annual incomefor purchasing a new residential home in the 3-4
years till March 2005. (sourceCRISILreport 19th February, 2009) As the borrowing cost for banks and
housing finance companiessteadily increased in line with rising interest rates in the economy in the
past two years uptoSeptember‗ 2008, banks and housing finance companies resorted to hike in interest
rates so asto maintain their interest spreads. Interest rates on new home loan originations had
increasedsignificantly by 200 basis points during April‗ 2008 to August September‗2008. As a resulta
higher proportion of monthly incomes was paid as home loan equated monthly instalments(EMI). But,
the scenario has taken the reverse turn in the last quarter of the financial year2008-09 which was
evident from the higher booking of flats and sharp increase in thedisbursements. As interest rates are
heading southward, public sector banks have set the pace.Housing finance companies would follow
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the suit. It may be mentioned here that with thedeclineininterest rates, LIC Housing Finance has
passed on 150 basis points rate cut to thecustomers i.e. 75 basis points each on 1st January, 2009
and 1st April, 2009. Our interestrates are among the lowest in the industry. This has helped our
company in retainingcustomers and maintaining high growth rates even in tough conditions. And
interest rate is just one of the factors. Transparency, hassle-
free services, property prices and buyer‗srepayment capacity are equally important. The customer
would not arrive at a decision solelybased on the reduction in interest rates for one year. LIC Housing
Finance is one of the bestplayers in the industry in terms of EMI as our company has no hidden costs.

LIC Housing Finance

LIC Housing Finance Ltd. is one of the largest Housing Finance Company in India.Incorporated on
19th June 1989 under the Companies Act, 1956, the company was promotedby LIC of India and went
public in the year 1994. The Company launched its maiden GDRissue in 2004. The Authorized
Capital of the Company is Rs.1500 Million (Rs.150 Crores)and its paid up Capital is Rs.850 Millions
(Rs.85 Crores). The Company is recognized byNational Housing Bank and listed on the National
Stock Exchange (NSE) & Bombay Stock Exchange Limited (BSE) and its shares are traded only in
Demat format. The GDR's are listed on the Luxembourg Stock Exchange.
The main objective of the Company is providing long term finance to individualsforpurchase /
construction / repair and renovation of new / existing flats / houses. The Companyalso provides
finance on existing property for business / personal needs and gives loans toprofessionals for purchase
/ construction of Clinics / Nursing Homes / Diagnostic Centres / Office Space and also for purchase of
equipments.The Company possesses one of the industry's most extensive marketing network in India
:Registered and Corporate Office at Mumbai, 6 Regional Offices, 13 Back Offices and 158marketing
units across India. In addition the company has appointed over 1352 Direct SalesAgents (DSAs), 7085
Home Loan Agents (HLAs) and 777 Customer Relationship Associates(CRAs) to extend its marketing
reach. Back Offices spread across the country conduct thecredit appraisal and administrative
functions.The Company has set up a Representative Office in Dubai and Kuwait to cater to the Non-

Resident Indians in the GLCC countries covering Bahrain, Dubai, Kuwait, Qatar and SaudiArabia.
Today the Company has a proud group of over 10,00,000 prudent house owners whohave enjoyed the
Company's financial assistance.

Profile & Progress

 Provides loans for homes, construction activities, and corporate housing schemes.

 Around 91% of the loan portfolio derived from the retail segment and the rest fromlarge
corporate clients

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 Formed three new wholly owned subsidiaries in 2007-08 to promote marketing of financial
products and venture capital fund.

 Rated ‗AAA‗ by CRISIL for the 8th consecutive time in 2008-09; maiden
FixedDepositprogram received an FAAA/stable rating by CRISIL.

 An offshoot of Life Insurance Corporation of India (LIC), incorporate in 1989.

 Registered & Corporate Office at Mumbai with 6 regional offices, 13 Back Officesand 130
marketing units across the country .

 1352 Direct Sales Agents (DSAs), 7085 Home Loan Agents (HLAs) and
777CustomerRelationship Associates (CRAs) comprise its pan-Indian marketing network.

 Representative overseas presence in Dubai and Kuwait

 Listed on the Bombay Stock Exchange Limited, National Stock Exchange of India

 Limited and the Luxembourg Stock Exchange.

 More than 10,00,000 satisfied customers across the country since inception.

 Reported a 23.90 percent increase in disbursals in 2008-09.

 Improved return on networth by 267 basis points to 23.80 percent in 2008-09.

 Reduced net NPA to a record low of 0.21 percent in 2008-09.

 Enhanced PAT 37.30 percent to Rs. 531.62 crore in 2008-09.

 Un-interrupted dividend payment record since 1990.

 Recommended 30 percent increase in dividend over previous year i.e from 100 percent to 130
percent

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  Financial Performance

Graph : growth in loan book of LIC housing finance

Interest income from housing loans increased 34.90 percent from Rs. 2036.79 crore in 2007-08 to Rs.
2747.65 crore in 2008-09. The net interest income grew by 31.97 percent from Rs.553.94 crore in
2007-08 to Rs. 731.04 crore in 2008-09. Profit after tax surged 37.30 percentfromRs. 387.19 crore in
2007-08 to Rs. 531.62 crore in 2008-09.

GRAPH : DEBT –EQUITY RATIO OF LIC HOUSING FINANCE

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Operations:

 Funds mobilized grew 49.38 percent from Rs. 7489.70 crore in 2007-08 to Rs.11,188.33crore
in 2008-09.

 Sanctions (Ind.+Proj.) increased 26.46 percent from Rs. 8617.88 crore in 2007-08 toRs.
10898.47 crore in 2008-09.

 Disbursements (Ind.+Proj.) grew 23.90 percent from Rs. 7071.48 crore in 2007-08 toRs.
8762.01 crore in 2008-09.

 Loan portfolio grew 26.18 percent from Rs. 21936.41 crore in 2007-08 to Rs.27679.28 crore in
2008-09.

Margins:

 Net interest margin improved by 10 basis points from 2.85 percent in 2007-08 to 2.95percent
in 2008-09.

 Return on equity grew by 267 basis points from 21.13 percent in 2007-08 to 23.80percent in
2008-09.

 Net profit margin improved by 49 basis points from 17.82 percent in 2007-08 to 18.31percent
in 2008-09.

 Asset Quality: Gross NPA declined by 63 basis points from 1.70 percent in 2007-08to 1.07
percent in 2008-09.Net NPA levels declined 43 basis points from 0.64 percentin 2007-08 to
0.21 percent in 2008-09

 Performance of the Company:

In the turbulent times when Housing sector waspassing through rough patch, LIC Housing Finance
largely could manage the environmentwell, inspite of various global as well as domestic economic
challenges and was successful inproducing good business growth by its inherent strength in meeting
difficult challengesthrough unceasing and untiring efforts. The Company has not only ensured
consolidation of the gains achieved in the past years, but also ensured further growth and
increasedprofitability. The year 2008-09 has been a year of further containment of defaults and
NPAlevels when compared to previous years.
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Lending operations

The main thrust continues on individual loans with a growth of 25 percent as against 20percent in the
previous year. However, project loans were also given due weightageresulting in a modest growth of
20 percent over previous year. During the year, the Companysanctioned 67,886 individual loans for
Rs. 8,186.02 crore and disbursed 67,237 loans for Rs.7,351.09crore during 2008-09. Individual retail
loans constitute 75.11 percent of the totalsanctions and 83.94 percent of the total disbursements for the
year 2008-09 compared to the last year‗s figure of 75.84 percent and 83.47 percent respectively. The
retail (individual) loan portfolio grew by over 22 percent from Rs. 20,618.78 crore as on 31st March,
2008 to Rs.25,252.87crore as on 31st March, 2009. The cumulative sanctions and disbursements
sincethe incorporation, in respect of individual loans are: Amount sanctioned Rs. 45,624.24
croreAmount disbursed : Rs. 42,993.98 crore.

Non-Performing Assets and provisions:

GRAPH : IMPROVEMENT IN ASSET QUALITY

The amount of gross Non-Performing Assets (NPA) as on 31st March, 2009 was Rs. 297crores, which
is equivalent to 1.07 percent of the housing loan portfolio of the Company, as against Rs. 372.92 crore
i.e., 1.70 percent of the housing loan portfolio as on 31st March,2008. The net NPA as on 31st March,
2009 is reduced to Rs. 57 crore i.e. 0.21 percent of the housing loan portfolio vis-à-vis Rs. 140.90
crore i.e., 0.64 percent of the housing loan portfolio as on 31st March, 2008. The total cumulative
provision towards housing loan as on31st March, 2009 is Rs. 240.25 crore. During the year, the
Company has written off Rs. 5.40crore of housing loan portfolio as against Rs. 38.99 crore during the
previous year.

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Fund raising The Company raised funds aggregating to Rs. 11,188.33 crore through term loans from
banks, Non-Convertible Debenture (NCD), sub-ordinate debts, commercial paper Public Deposit and
others which were used for fresh disbursements as well as repayments/prepayments of past
borrowings. The Company‗s NCD issue was rated ‗AAA‗
and Public Deposit was rated as FAAA/STABLE by CRISIL.

 Macro-Economic AnalysisCompetition

The Housing Finance Industry is one of the most keenly competitive segments of theEconomy, with
the Banking sector having a significant presence. However, Housing FinanceCompanies with a
dedicated focus on the industry and better understanding of the underlyingreal estate markets stand on
a better footing when it comes to understanding the needs andrequirement of the customers as also
assessing the risks in the industry. It may be mentionedhere that with the decline in interest rates, LIC
Housing Finance has passed on 150 basispoints rate cut to the customers during the calendar year 2009
so far 75 basis points each on1st January, 2009 and 1st April, 2009. Our interest rates are among the
lowest in the industry.This has helped our company in retaining customers and maintaining high
growth rates evenin tough conditions. And interest rate is just one of the factors. Transparency, hassle-
freeservices, property prices and customer affordability are equally important. NHB has loweredits
interest rates on refinance to housing finance companies. Refinance for rural housing atconcessional
rate of 8 percent per annum for seven years has also been provided. Its‗ PLR hasbeen reduced to 10.75
percent per annum. The refinance facility of Rs. 4,000 croreextendedby RBI to NHB will be on-lent by
NHB to housing finance companies with a cap of Rs. 400crore per housing finance company with the
condition that the refinance would be available atan interest of 8 percent, only for loans below Rs. 20
lakh. Housing Finance, the Company,through its competitive pricing, transparency in operations, wide
distribution network andgood customer service, has not only been able to show a good growth in new
business, buthas shown an improved retention rate, which is reflected in high growth of loan book.

Opportunities

There are many unique characteristics of housing distinguishing it from other goods. It is a universal
necessity. Home ownership is a social goal, bringing social status to the buyer.Housing is also a
relatively expensive asset, often soaking up a lifetime‗s savings. Housing
properties have a downward sloping demand curve, which means that less people would effectively
buy when prices are high and vice versa. At high prices, buyers postpone their buying decisions and
opt for rented accommodation. At low prices, people often purchase more than one house. Disposable
incomes determine purchasing power. Government policies relating to interest rates, mortgage

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subsidies, tax rebate and other taxes like stamp duty etc. also impact the housing property market. The
housing sector is marked by a variety of taxesand regulations. These are meant to ensure the safety of
houses for occupation and to conferrights of ownership to enable further transactions. Given that
building or acquisition of ahouse usually involves several intermediary agents (either statutory like
registration of various title documents or facilitating agents such as brokers, builders or financiers), the
finalcost of acquisition includes not just the price of the property that is paid to the seller (in casethe
property is purchased) but also all the intervening transaction costs. As for the housingproperty market
in India, the residential housing property segment constitutes about 75percent of the real estate market
in terms of value. Real estate development activity hasshifted from metros to their suburbs and tier-
two cities. A gradual shift to tier-three cities andrural areas is taking place. Easy availability of finance
from the housing finance companiesand commercial banks at lower interest rates, increased salaries
and availability of fiscal andtax benefits are propelling the demand for housing properties. The growth
of the InformationTechnology Enabled Services (ITES), industry has been a significant contributor of
housingproperty demand in recent years. ITES firms are moving from traditional centres likeMumbai,
Delhi, Bangalore, Hyderabad and Chennai to the National Capital Region, Pune,Chandigarh, Jaipur,
etc. in order to be cost effective. This is resulting in not only the boom inresidential property markets
but also in the institutional property markets in these cities.There is great demand for modern office
buildings and commercial spaces in India.

 Threats (bottlenecks)

Impact of legal charges and documentation fees

There are taxes / duties / fees payable to the state at the construction stage. There are two aspects of
the cost namely :

monetary cost and

cost in terms of time devoted in obtaining various permissions and clearances.

The number of permissions and documentation required can be quite large. Further,permissions have
to be taken from different departments and that too sequentially. This delays the process of housing
construction and occupation. The actual fees imposed by the government are not necessarily high but
the time taken to obtain requisite permissions is very long, procedures cumbersome and sometimes
involves extra payments to facilitate the movement of files and getting the transaction through, is
significant vis-à-vis the statutory fees. The delays highlight the sluggishness of the market by
increasing the gap between change in demand and the market response to it.

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  Future Outlook:

It is estimated that the housing finance industry will be able to maintain a higher growth in fresh
origination of residential home loans over next three to five years mainly due to increased affordability
of the borrower i.e. ratio of average property price to average annual income, on account of the falling
loan interest rates and decrease in property prices. The average age of borrowers has declined over the
years, while the number of double-income households has grown significantly thereby enabling them
to borrow higher loan quantum due to increased affordability and repayment capacity. The growth
drivers will continue to increase demand for self-occupied residential housing; Revival of economy
will certainly lead to a steady increase in monthly incomes across key sectors. Rising proportion of
double income households, renewed confidence in higher income generation, reassurance of
jobsecurity and availability of variety of financing options should stimulate growth of the housing
sector. All these factors will further boost the impact of increased affordability, leading to the sec
tor‗s steady and comfortable growth. Looking forward, LIC Housing
Finance would like to remain focused in end-user segment for growth and increased profitability and
wish to make the coming year, a year of further consolidation and progress by crossing greater
milestones.

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 5. SCOPE OF STUDY

The future of NBFCs is likely to advance if they concentrate on the following aspects like

Offer uninterrupted 24 into 7 customer support with informative engagement programs to attract and
maintain customers

Partnership with Fintech markets will help NBFCs to gain more recognition and compete stronger in a
congested market

Adopt efficient risk detection, management, and mitigation policies to help NBFCs survive market
losses, and analyse whether lenders are financially good to collaborate

Increased opportunities to embark their presence in unbanked rural areas

The expansion of NBFCs into different markets like infrastructure, capital markets, debt funds, asset
acquisition, and personal finance increases their scope and future

Outline a segmentation strategy to focus on customer segments, distribution channels, and establish
geographical locations for operations
Over dues must be collected via a data-driven approach to expand recovery and avoid write-off.

Make their presence in rural areas, where traditional banks do not lend money. This can benefit poor
people greatly.

Use the Online space as a constructive medium for connecting with borrowers who are let down by the
banks. This will serve as a great platform for identifying borrowers and providing them with cheap
investment options.
The NBFC sector is progressing in the right direction, and that is the reason it has gained so much
importance from the government and other regulators. NBFCs primary role lies in bridging the gap in
SME. In this regard, NBFCs have to update their business model or strategy, mandatorily.

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The NBFCs have exceeding product lines, wider reach and better understanding of customer
segments. The substantial assets are in vehicle (both commercial and passenger) segments, personal
loans and housing finances etc. They fill the gap which traditional banks wary to serve. They have
been growing at CAGR of 18% and are expected to maintain same trend. Effectiveness of government
scheme and greater disposable incomes will lead to persistent growth in consumer finance segment.
Small business segment also display a growth trajectory. Newly evolving digital trend, increased
consumption, greater credit penetration will supplement the said growth trend (Singh, 2014).
NBFC covers sector specific financing needs covering micro, small and medium enterprises
(MSMEs), large industry infrastructure, and consumer and vehicle loans. About 60% of total credit
goes to industry followed by retail and agriculture (RBI, 2017). Retail credit has increased at highest
pace due to growth in consumer durable business and credit card receivables. While credit to
agriculture and allied activities have been contracted due to demonetization and disruption in cash
transacting culture of farmers.

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Ground level understanding of MSME customers and their profile give NBFCs a cutting edge over the
banks. They innovate and customize products according to customer‘s need more perfectly than
traditional banks. The asset base of NBFCs has increased by 53.5% from 2012-2015. The total share
of credit off take is expected to grow between 18-20% by 2020(Sunkara, 2016).

NBFCs have tremendous growth opportunities. Digital technology creates this scope. They can
enhance their product portfolio, customer experience and related processes by adopting digital
technology. As India has a user base of 320 million customers in smart phone market and is expected
to increase in future as well, it provides an opportunity to NBFCs to enrich their positioning of
financial products. They can use the vast customer data available on digital and social media platform
to improve customer servings. Credit worthiness of large and untapped market segment can also be
found with help of this data which helps NBFCs increasing their business. Online customer lending
has grown from 3% in 2013 to 15% in 2015 providing scope to NBFCs to enter in this space. Digital
technology can help in identifying the individual, his intentions and ability to repay loans. NBFCs can
increase customer satisfaction by using online calculators, knowledge centers, live chats, and live
application tracking system. Credit risk can be determined by analyzing data from mobile bill
payments, browsing and download history, prepaid top ups. NBFCs can enter into partnership with
banks and other related agencies to do robust data capturing. Psychometric tests can also be used to
widen the customer base. They evaluate borrower‘s ability and willingness to pay( PwC
&Assocham,2015).
In this way underserved consumers which are often neglected by traditional banks also get a chance to
be eligible for small loans. Lenders can use this credit scoring to provide small ticket loans. For
example, a Tanzanian mobile service provider Vodacom used First Access which is a data analytics

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company to develop and use credit score from mobile data and provide loans to customers (Ascocham,
2016). The e-commerce business is expected to generate revenue of 120 billion USD by 2020. Further
the growing trend of online payments is expected to steer e-commerce sector in India. This has
generated a new breed of online lending platform. NBFCs can use this channel to generate more
business (CRISIL, 2018).

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 6. CONCLUSION AND RECOMMENDATIONS

From the above, it is clear that NBFCs have a unique role to play in the financial services industry.
NBFCs are characterized by their ability to provide niche services. Because of their low overheads,
quick response and organizational flexibility, they can provide custom-made services relatively faster
and deliver better value than other players such as banks and financial institutions.

Non-banking finance companies (NBFC) operate mostly in unorganized and under-serviced segments
of the economy, thereby creating a niche for themselves. In contrast to the banks, the NBFC business
model is characterized by very close customer interaction and relationship, a deep understanding of
customer needs, wider and specialized branch network, and low-cost infrastructure. If I were to pick
one distinctive criterion that separates an NBFC from a bank, it is the last mile credit delivery.

Over the years, in its development role, the RBI has been attempting to expand credit by
exhortation. But public sector banks have proved that even with their best efforts they are able to
reach only a limited extent of credit expansion.

Classification of NBFC’s in India on the basis of Finance Operations

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 7. DATA COLLECTION
This study conceptually covers a period of ten years starting from 2004-05 to 2013-14 the present study
based on secondary data, the data has been gathered from various sources such as published books, journals,
magazines, newspapers, websites and past records governments, private organization involved in housing
finance operations as well as regulations. And also the data collected from RBI Bulletins also form part of
the secondary data.

 LIMITATIONS OF THE STUDY:

The present study suffers from the following limitations.

As reported by RBI, there were total 13014 NBFCs in India and 428 NBFCs accepting public deposits in
India registered with RBI in 2006. All these NBFCs are specialized in different areas of financial assistance.
Further it is difficult to identify the NBFCs that are specialized in housing finance. There are top five
NBFCs in housing finance in India, namely, Dewan Housing Finance, GIC Housing Finance, Gurh Housing
Finance HDFC Housing Finance and LIC Housing finance. Hence, the present study analyzed the
performance evaluation of these five NBFCs only. The present study some of the limitations as under:
1. No primary source of information is used to reinforce the truth of findings got through the secondary
information.
2. Valuation of growth is available only for listed companies but not for unlisted companies, as there is
no availability of P/E ratios.
3. Loss making firms are out of the purview of this present study.

4. Returns to investors depend upon so many other variables not just on growth & dividends. Put
differently, the market values of Non- banking Housing Financial Companies do not depend only on growth
and dividends but also on other variables like risk, quality of management etc.
5. Findings of the study can be validated by conducting similar study on other companies of different
industries.

6. Non-Banking Financial Companies consists of investment & holding companies, leasing companies,
Housing Finance companies etc. For the present study, only Non-Banking Housing Financial Companies
were considered.
7. Researcher used accounting information of select companies in terms of number of ratios on the
presumption that all Housing Financial companies have used similar Accounting Policies.
8. Findings & Conclusion provided here are subjective in character.
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  ORGANIZATION OF THE STUDY

The present study entitled Performance Evaluation of non banking financial companies in India (A
comparative study of select companies) has been organized into seven chapters.

The first chapter makes as attempt to provide introduction and design of the study comprising Introduction,
need and scope of the study, statement of the problem, objectives of the study, methodology followed,
period of the study, limitation of the study and chapter scheme.

The second chapter deals with the ‗Review of Literature‘, which discussed about literature survey
conducted.

The third chapter deals with the Growth and Development of NBFCs in India. Further to understand growth
& significant role in Indian economic system.

Fourth Chapter is used to bring clear understanding of Regulatory framework of NBFC,s in India, other
aspects of regulations & supervision, registration requirement of NBFC‘s, amendment to RBI Act & New
regulatory frame work & Salient feature of the RBI regulatory frame work has been under taken.

Fifth Chapter Provides a Profile of Non Banking Housing Financial Companies of Selected companies dealt
in this chapter.

The sixth chapter constitutes an analysis of Performance evaluation of select Non Banking Housing
Financial companies in India is provided in Sixth Chapter.

The concluding chapter portrays the key findings of the study based on the analysis of the previous chapter
and offer some valuable suggestions for overall improvement of select Non Banking Housing Financial
Companies along with conclusion. And also Scope for further research is the subject matter of Seventh
chapter which is concluding and final in nature.

Besides the above chapters, a list of the research papers, articles, books, research reports and web sites
referred are provided under the title ―Bibliography‖ as the research report.

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  REFERENCES:

1. Martina Rani, Performance of Non-Banking Financial Companies, New Delhi, Discovery Publishing,
2009, p. i.
2. Non-Bank Financial Institutions in India: Performance Trends and Outlook, Fitch Friday
Presentation, Ananda Bhoumik & Arshad Khan, December, 2008 Report.
3. L.M. Bhole, Management of Financial Institutions and Financial Markets, New Delhi, Tata McGraw
Hill, 1998, pp. 20-25.
4. Shailendra Bhushan Sharma and Lokesh Goel, Functioning and Reforms in Non-Banking Financial
Companies in India, IN: Inclusive Growth & Innovative Practices in Management, edited by Arvind Singh,
Delhi: Wisdom Publications, 2012, p. 21.
5. Jafor Ali Akhan, Non-Banking Financial Companies in India: Functioning and Reforms, New Delhi,
New Century Publications, 2010, p. xiii.
6. Pahwa, Guide to Non-Banking Financial Companies, Lucknow, Vinod Law Publications, 1998, pp.
8-10.
7. http://www.apnapaisa.com/tag/non-banking-financial-companies/

8. http://www.apnapaisa.com/tag/non-banking-financial-companies/

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