How do NBFC companies promote Micro businesses in India?



At a time when the focus is on the damaged loans that banks receive from their large borrowers, the NBFCs are rapidly expanding their loan portfolio by providing financing to micro, small and medium enterprises in India. There is also a large amount of NBFC for private clients and the housing sector. It is not surprising to see that the number of NBFC increases in India. 

Today, more than 50 million MSMEs operate in India. Banks remain extremely cautious about extending credit lines to MSMEs, while a large number of non-bank financial companies have already met the credit deficit requirements. The Financial Stability Review of the Reserve Bank of As per research studies, the NBFC sector was Rs 22.1 lakh crore as of March 2018 and borrowings grew at 19.1 percent during FY17-18, loans and advances increased 21.2 percent and investments increased 13.4 percent.

The MSME sector is increasingly seen as the next main driver of India's new success. Some of the new non-bank financial companies are catalyzing the growth of MSMEs by driving changes in the following strategic dimensions:

1. Interrupt the Existing state

The need is the mother of the invention, and the NBFCs had to remain agile to compete with the power of the banks. NBFCs have innovated in products, delivery methods, and operational methods to attract their target audience. Gold loans, home loans, capital loans, and commercial vehicle financing are some of the innovations of NBFCs in the last decade.

These companies have experimented with data science to overcome the lack of credit report agency scores and even official income documents. The use of social profiles, E-KYC, digital tax data, electronic banking history and many other sources of data helps new NBFCs to alter the status quo of financial services.

2. Make commercial loans accessible

The new era of NBFCs will greatly facilitate access to credit facilities for small businesses, particularly the diverse MSME sector in India. The youngest financial companies of the new era have put the entire commercial credit process online and created an Uber moment in financial services. They established the last kilometer of commercial connection, either digitally or by creating slender local offices. They are not afraid to experiment with the organization of credit camps, rely on regional festivals or events to make credit known to companies.

With simplified and homogeneous procedures and a combination of conventional and unconventional risk mapping procedures, these NBFCs can become India's response to the generalized credit deficit, especially when a large number of public sector banks are trying to recalibrate their debts bad.

3. Help for bankless and paperless layers

Financial companies of the new era have taken on the daunting task of spreading financial inclusion and spreading SMEs throughout the country through organized financial services. As part of their business mandate, financial companies of the new era often support MSMEs with accounting and other documents.

Besides, with their last-mile connection, NBFCs help answer a variety of MSME concerns and questions and make an informed decision. In some cases, NBFCs go beyond their financing function and actively help MSMEs to adopt the best business practices and better manage their businesses.

The NBFCs have created an unprecedented niche of loyal customers by finding a way to extend the credit line to different segments disadvantaged by banks, such as banks. B. unpaid people, rural businesses, low-income households, microenterprises, etc.

There is no doubt that the NBFCs Revival has overvalued and expanded the entire credit market in the country. Although formal banking and financial institutions have continued to grow, they have not kept pace with credit hunger in a rapidly growing country. The Indian MSME sector will prosper and the Indian government has begun to use programs such as Make in India, Skill India, and Digital India to strengthen MSMEs and then create a crucial engine for the growth of our economy. The New Age NBFC loans for MSMEs are clearly in a good environment.

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