NBFCs have doubled market share in SMEs in last two years, says study
As banks grapple with bad loan problem, non-banking financial companies (NBFCs) have doubled their market share in small and medium […]
Sarabjit Kaur January 7, 2018
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As banks grapple with bad loan problem, non-banking financial companies (NBFCs) have doubled their market share in small and medium enterprises (SMEs) in the last two years, says a study. “With banks tightening their purse strings owing to increasing bad loans, Indian NBFCs are growing their market share. However, they will have to keep pace with new technologies and changing customer aspirations to attract timely private equity (PE) investments,” a joint study by industry body Assocham and advisory firm PwC said. The study suggests that NBFCs must challenge the status quo in their business and find funds to invest into operating models with the potential to disrupt the industry. With the digital advance of policy initiatives such as India Stack, Aadhaar Pay and Direct Benefit Transfer (DBT) and exponential increase in smartphone/internet access, NBFCs need to think hard about tweaking their current business models to grow in a hybrid world – digital plus physical. “New tech-based business models have the potential to crunch the learning period substantially and re-balance the strategic advantage of information access by inserting themselves into the value chain with technology,” the study titled Fuelling NBFCs through Private Capital said. NBFCs will have to invest in new technologies to lower their cost of acquiring new segments, servicing existing customers and de-risking the portfolio in order to ride the wave of increasing formal credit penetration in a growing economy, the study noted. Besides, in order to fulfil demands of the new-age customer in terms of credit facilities, NBFCs will have to invest in analytics and artificial intelligence capabilities to be able to connect to the customer in a hyper-personalised manner.