Can 2019-2020 be the best financial year for NBFC sector in India?

1. Can 2019-2020 be the best financial year for NBFC sector in India? For years, the NBFC sector achieved growth of immense scale thanks to its ability to cater to the unorganized sector and burgeoning businesses too small to be able to take on big loans from bigger banks. This has meant that they have been the go-to-source for millions of people in India in rural areas, the unorganized sector and the role of NBFCs in financial inclusion has been telling. After years of steady growth, the second half of the 2019 financial year led to a dip in fortunes for many NBFC companies. In an attempt to expand, most NBFCs began providing loans without assessing the risk of defaults or the viability of businesses to successfully turnover profits. The end result? The ensuing liquidity crunch ensured that NBFCs faced a financial crisis unlike anything they had ever known and this led to many of them floundering or outright perishing. In such a seemingly unfavourable scenario, what does the future hold for NBFCs? Can the current financial year of 2019 - 2020 be the best financial year for the NBFC sector in India? The future remains bright for companies who have been sound in their strategy and wise in their lending during the crisis period. There is certainly cause to remain optimistic that the current situation is a passing phase and that even more growth awaits companies who are willing to remain steadfast in their approach. 1. Government support: In this time of finance crunch the government has come forward with funds to help revive these important institutions and help them once again thrive. In this year’s budget, Finance Minister Nirmala Sitharam has promised to provide funding

2. to NBFCs that are already financially sound. Together with the RBI the government has issued various reforms to help the sector soar once again. ● The current budget announcement provides first loss guarantee to portfolio purchases from NBFCs. ● Banks can now buy NBFC assets upto one crore. ● The RBI has ensured that there are measures to make sure the flow of credit to NBFCs is easier. ● The RBI has been given more power to supervise and regulate NBFCs and be more hands on with the sector. 2. RBI guidelines: The new RBI regulations give a much stronger emphasis on stronger asset liability management (ALM) framework and stringent rules on funds. They have proposed a liquidity coverage ratio that ensures that NBFCs do not burn through their funding. 3. NBFCs will continue to be in demand: As long as there are businesses all over india looking for means to expand, the avenues for NBFCs will consistently be there. They are the means by which many small companies achieve growth and hire employees.As long as NBFC companies assess risk and caution, they have much scope for positive growth. In fact, risk management is the key to NBFCs’ survival. 4. The market continues to improve: What was once unfavourable conditions have now given way to a more optimistic growth projection. This means that the market is bound to improve leading to more businesses needing financial support and this in turn further improves the market. The current scenario means that NBFCs are still a great investment opportunity for investors provided they are financially stable. Many companies such as Capri Global have been able to successfully grow and provide funding to businesses all over India. In the past four years alone, Capri Global has grown 7 times and has been on a 30% growth rate Year-On-Year. Immaculate planning, a desire to help people in need and great customer relations has been the driving factors for this growth. A strong track record of impacting people’s lives and helping women, the MSME sector and people in Tier 2 and Tier 3 cities is also a big reason for Capri Global’s success. NBFC companies have already become a key part of India’s economy and will continue to play a key role in the growth story that India is creating. As long as NBFCs remain prudent, there is no limit to their growth and the ability to regain momentum to achieve even bigger things.