Performance of Non Banking Financial Institutions In India

FINANCE

International Conference on Research avenues in Social Science

The financial sector in any economy consists of several intermediaries. Apart from banking entities, there are investment intermediaries (such as mutual funds, hedge funds, pension funds, and so on), risk transfer entities (such as insurance companies), information and analysis providers (such as rating agencies, financial advisers, etc), investment banks, portfolio managers and so on. All such entities that offer financial services other than banking, may be broadly called non-banking financial institutions. The non-banking financial companies (NBFC's) have emerged as substantial contributors to the Indian economic growth by having access to certain deposit segments and catering to the specialized credit requirements of certain classes of borrowers. A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme of arrangement of any other manner, or lending in any manner is also a non-banking financial company. While NBFCs have been rendering many useful services, several adverse, unhealthy features of their working also have been observed. The protection of savers from malpractices has been one of the important issues. The authorities have evolved an appropriate regulatory/statutory framework to oversee the operations of NBFCs. I may assure you that the Bank has an open mind for any suggestion within the framework of policy and basic postulate that the depositors’ interest should be safeguarded. All these concerns were examined objectively and revised guidelines have been issued which would go a long way in the best interests of strengthening the NBFC sector.

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