role of nbfcs in promoting inclusive growth

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  • Financial Foresights

    FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY

    Role of NBFCs in promoting inclusive growth

  • About FICCI

  • DISCLAIMER

    Acknowledgments

    We thank our Partners

    Partner Exchange

    Industry Insights Partner

  • Contents1. PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

    2. INDUSTRY INSIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Promoting Inclusive Growth Role of Non-Banking Finance Companies 10

    Role of NBFCs in promoting inclusive growth 13

    Role of NBFC-MFIs in promoting inclusive growth 17

    Role of NBFCs in promoting inclusive growth 21

    Role of NBFCs in promoting inclusive growth 25

    Role of NBFCs in promoting inclusive growth 30

    Role of NBFCs in promoting inclusive growth 33

    NBFC-MFI: The Beacon of Financial Inclusion 41

    Role of NBFC in inclusive growth 45

    Criticality of NBFCs in Indias infrastructure creation 48

    Role of NBFCs in promoting inclusive growth 52

    3. THE POLICY PULSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57Banking Sector 58Capital Markets Sector 62Insurance Sector 65

    4. FICCIS DATA CENTRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69Indian Economy-An Update 70Investment Banking Updates 73Markets Watch 78

    5. FINANCIAL SECTOR EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79

    Synopsis of Past Events 79

    6. FINTAINMENT SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

  • Preface

    Dr. A. Didar SinghSecretary GeneralFICCI

  • Industry Insights

    In association with

  • 10 Role of NBFCs in promoting inclusive growth

    Industry Insights

    Promoting Inclusive Growth Role of Non-Banking Finance Companies

    NBFCs are playing a vital role in furthering the cause

    Mr. Shachindra Nath,

  • 11Role of NBFCs in promoting inclusive growth

    Industry Insights

    Focus on SME

    Affordable Housing

    Innovative Business Models

    NBFCs have emerged

    intermediary in

    services accessible to a wider set of customer segments including SMEs. NBFCs have extended

    having a range of products that suit their needs in their portfolio

  • 12 Role of NBFCs in promoting inclusive growth

    Industry Insights

    Shachindra Nath Group CEO

    Religare Enterprises Ltd.

    Conclusion

  • 13Role of NBFCs in promoting inclusive growth

    Industry Insights

    Role of NBFCs in promoting inclusive growth

    NNBFCs complement banks

    industry

    Mr. Pinaki Ranjan Mitra,

    NBFCs have traditionallycomplemented the commercial banks and have prevented the concentration of credit risk in banks

  • 14 Role of NBFCs in promoting inclusive growth

    Industry Insights

    NBFCs role in promoting inclusive growth:

    3

    ________________________________________________________________________________________________________

    3

  • 15Role of NBFCs in promoting inclusive growth

    Industry Insights

    Need to recognize NBFCs

    inclusion agendaWhile the Income Tax Act allows deductions to banks and HFCs for non-recognition of income on NPAs-

    available to NBFCs

  • 16 Role of NBFCs in promoting inclusive growth

    Industry Insights

    The way ahead:

    Pinaki Ranjan MitraHead-Creadit Operations

    Ananya Finance

  • 17Role of NBFCs in promoting inclusive growth

    Industry Insights

    Role of NBFC-MFIs in promoting inclusive growth

    Mr. Chandra Shekhar Ghosh

    NBFCs have so far played a very

    development of the country by taking

    to under banked and unbanked, rural mass and people having small enterprises

  • 18 Role of NBFCs in promoting inclusive growth

    Industry Insights

    (source: RBI data base)

    Chart 2: Credit disbursed in billion Rs. across segments (Source: RBI database)

  • 19Role of NBFCs in promoting inclusive growth

    Industry Insights

    Table 1: A brief of the development programme run by Bandhan (data as on February, 2013)

    Development Program (in Numbers)

    3

  • 20 Role of NBFCs in promoting inclusive growth

    Industry Insights

    I think this is time that the government commissions an exclusive funding body for MFIs, instead of making Small Industries & Development Bank of India solely responsible for it

    Chandra Shekhar GhoshChairman & Managing Director

    Bandhan

    References:

    3.

  • 21Role of NBFCs in promoting inclusive growth

    Industry Insights

    Role of NBFCS in Promoting Inclusive Growth

    Ms. Archana S Bhargava,

    NBFCs play a crucial role in broadening

    services, enhancing competition and

    They are undoubtedly complementary to the banking system, capable of absorbing shocks and spreading risks at times of

  • 22 Role of NBFCs in promoting inclusive growth

    Industry Insights

    Financial exclusion of the Marginalized-critical role of Micro Finance

  • 23Role of NBFCs in promoting inclusive growth

    Industry Insights

    Recognition of NBFC-in Micro Finance

  • 24 Role of NBFCs in promoting inclusive growth

    Industry Insights

    Enhancing Tier I capital & Wider disclosure norms

    NBFC for inclusive growth

    Archana S Bhargava Executive Director

    Canara Bank

    Micro Finance Institutions are uniquely positioned

    inclusion and provide

    relatively poorer and vulnerable sections

  • 25Role of NBFCs in promoting inclusive growth

    Industry Insights

    Introduction

    Banks efforts towards

    be supported by NBFCs

    Role of NBFCs in promoting inclusive growthMr. Suman Chowdhury,

    The penetration of

    services is still far lower than the desired

    proportion of the households, especially in rural areas, remain outside the coverage of the formal banking system

  • 26 Role of NBFCs in promoting inclusive growth

    Industry Insights

    NBFCs continue to sustain healthy growth in retail

    1846

    2466

    3257

    3904

    4680

    0

    1000

    2000

    3000

    4000

    5000

    Mar-10 Mar-11 Mar-12 Mar-13 (E) Mar-14 (P)

    Rs.

    Bill

    ion

    0

    20

    40

    60

    80

    100

    Mar-10 Mar-11 Mar-12 Mar-13 (E) Mar-14 (P)

    Per

    cen

    t

    Vehicle Finance Gold loans Corporate/SME LAPLAS Personal Loans Others

    CRISIL believes that the major retail NBFCs have strengthened their underwriting and collection systems after the delinquency pressures they witnessed over the two years ended 2008-09

  • 27Role of NBFCs in promoting inclusive growth

    Industry Insights

    Banks NBFCs

    Semi-Urban & Rural, 30%

    Urban & Metro, 70%

    Semi-Urban & Rural, 60%

    Urban & Metro, 40%

    Trend in Overall Gross NPA

    3.5

    2.0

    1.61.9

    2.0 - 2.2

    0.0

    0.5

    1.0

    1.5

    2.0

    2.5

    3.0

    3.5

    4.0

    Mar-10 Mar-11 Mar-12 Mar-13 (E) Mar-14 (P)

    Per c

    ent

    NBFCs have strengthened their processes and systems to manage

  • 28 Role of NBFCs in promoting inclusive growth

    Industry Insights

    Origination and Underwriting:

    Collection and portfolio monitoring

    Regulatory framework to ensure stability and continuing origination of priority sector loans by NBFCs

    Diversity of resource

    for sustainable growth in NBFCs

  • 29Role of NBFCs in promoting inclusive growth

    Industry Insights

    Suman ChowdhuryDirector - Financial Sector Ratings

    CRISIL Limited

    Conclusion

  • 30 Role of NBFCs in promoting inclusive growth

    Industry Insights

    A

    Role of NBFCs in promoting inclusive growth

    NBFCs have been playing a complementary role

    institutions including banks in meeting the funding needs of the economy

  • 31Role of NBFCs in promoting inclusive growth

    Industry Insights

    Role of NBFC in Financial Inclusion

  • 32 Role of NBFCs in promoting inclusive growth

    Industry Insights

    Thampy KurianAdditional General Manager & All India Head

    Agricultural & Financial Inclusion DeptFederal Bank

    Summing up

  • 33Role of NBFCs in promoting inclusive growth

    Industry Insights

    Role of NBFCs in promoting inclusive growth

    Mr. Bindu Ananth,

    Policy thrust has been strongly dis-incentivising banks from partnering with NBFCs, and instead, has been continuing to nudge banks to open their own branches and originate assets through their own staff and agents

    ________________________________________________________________________________________________________

  • 34 Role of NBFCs in promoting inclusive growth

    Industry Insights

    1.

    -2.tion model:

    Containing systemic risk in 3.NBFCs:

  • 35Role of NBFCs in promoting inclusive growth

    Industry Insights

    Transaction cost for a loan ofRs. 10,000Model Minimum CRAR Transaction Cost2

    3

    ________________________________________________________________________________________________________

    3

    Bindu

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