1. ANALYSIS OF NBFC SECTOR
SATHISH KUMAR R
ABIRAMI A
SARAVANA PRABHU B
2. Industry Structure
Complimentary to banking system
12.7% of the total assets of financial system
Operate largely in vehicle financing, hire purchase, lease, personal loans, working capital loans,
microfinance, consumer loans, housing loans, loans against shares, investments, distribution of financial
products, etc
NBFC
Nature of
Business
Acceptance
of Deposits
NBFC-D NBFC-ND
3. Banks Vs NBFC
NBFC – Can accept only Demand deposits
Cost of funds
Business Model Flexibility – Limited reporting/documentation
Relaxed regulatory norms – Int. rate/ PSL/ Capital Market Exposure
DICGC not available, cannot issue cheques, NPA classification
Recovery Mechanisms – SARFAESI, DRT not present
Easy to obtain License, no restriction on number
of branches
KYC (know-your-customer) norms not Stringent
NPA Classification - 180 days vs 90 days
8. Use of Funds96.34
88.64
711.19
45.50
135.00
76.00
780.00
63.00
134.00
25.00
874.00
103.00
S LR NON- S LR
I NV E S TM E NTS
LOANS AND
ADV ANCE S
OTHE R AS S E TS
USE OF FUNDS - NBFC-D
2010 2011 2012
*Figuresareinmillions
3485
417
1198
788
4709
502
1507
895
5900
635
1595
1083
LOA NS & A DV A NCE S HI R E P U R CHA S E A S S E TS I NV E S TM E NTS OTHE R A S S E TS
USE OF FUNDS - NBFC-ND-SI
2010 2011 2012
11. Banks and NBFCs
F06 FY10 FY11
No of NBFCs 13014 12630 12409
Bank Credit of all scheduled Banks 1,572,780 3,337,659 4,060,843
NBFC advances as % of Bank Credit 10.77% 12.57% 13.20%
Assets of all scheduled banks 2,531,462 5,258,495 6,146,590
NBFC assets as a % of Bank assets 13.06% 13.33% 13.78%
Deposits of all scheduled banks 2,185,809 4,635,224 5,355,160
NBFC Public deposits as % of bank
deposits 1.05% 0.37% 0.22%
*Figuresareincrores
12. STRENGTH
Easy and fast appraisal &
disbursements
Product Innovation and Superior
Delivery
Strong Market Penetration and
increased operating effeciency
Collection Effeciency
WEAKNESS
Too much of diversification from
core business
Increased regulatory coverage
No access to SARFAESI or DRT for
recovery from bad loans and no
access to refinance
Volatile business environment
OPPORTUNITIES
Large untapped market, both rural &
urban and also geographically
Tie-up with global financial sector
giants
New opportunities in credit card,
personal finance, home equity, etc
THREATS
High cost of funds
Restrictions on Deposit taking NBFCs
Growing retail thrust within banks
and competition from unorganized
money lenders
Significant slowdown in the
economy affecting the various
segments of NBFC. Deterioration of
asset quality and rising levels of NPA.
SWOT Analysis
13. Recent Regulatory Changes
Usha Thorat Committee
Tier I Capital of 10%, as against 7.5% recently
NPA recognition norm to be lowered to 90 days from 180/360 days
Standard asset provisioning -0.40% from March 31, 2014.
Acceptance of Deposits
Liquidity Management
Raising money through private placement of debenture
NBFCs finance for Purchase of Gold – LTV 60%