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How Sebi Registered Investment Advisors And Nbfcs Facilitating Instant Cash Loans

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By Author: Kalpit Kumar
Total Articles: 165
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The small business finance market that was continually getting rejected from the banks have now turned out to be a great opportunity for the Non-banking finance companies (NBFCs) with localized presence and domain knowledge. Since their association with the small firm’s financial sector, the SEBI registered investment advisors and NBFCs have evolved substantially in terms of operation, a variety of products, instruments, technological sophistication, etc.

Undoubtedly, the SEBI registered investment advisors and NBFCs have scripted a great success story that will reap some of the most fruitful benefits in the near future. Taking a cue from the recent statistics, it’s evident that in terms of financial assets, NBFCs have registered a robust growth, i.e., a compound annual growth rate (CAGR) of 19% over the past few years. The NBFCs stand supported by several factors such as instant cash loans online, superior product lines, low cost, broader and effective reach, robust risk management capabilities to check and control bad debts, and proper comprehension of their customer segments. While catering to the needs of the informal sector, the NBFCs primarily rely on their ability to assess the clients’ income, develop templates accordingly to gain a better insight of the margins and cash flows of local businesses, and have a strong in-house process of credit and security verification. The number of originators in the small sector and the value of assets managed by them are very less than the demand.

According to a 2016 report by consulting firm PwC India, it is stated that by 2020, the credit lending ability and instant cash loans/online services of Indian NBFCs is estimated to account for anywhere between 18.2% and 20.9% of the total credit off-take in the country.

Indeed it is evident that the development of NBFCs segment within the overall financial system of India is picking up as a challenge for the other sectors - i.e., banks to innovate, to improve quality and competence. At times, in a number of un-treaded trajectories, the SEBI registered investment advisors and NBFCs were the first to explore the market and develop before the banks entered the scene. Their unique team of underwriting and credit delivery has gained much appreciation and credits for scaling up the finance provision for the small businesses while maintaining strong portfolio quality. The loans provisions provided by NBFCs further facilitate the small marketers with their occupational needs such as equipment purchase, business expansion, and technology up gradation and working capital requirements.

There are some from the many numbers of originators in the small sector that have developed their niche of operations to meet specific gaps of working capital needs of corporate, instant cash loans/online services, equipment financing for larger MSMEs, ongoing business requirements for smaller businesses, etc. On the other hand, rests of them are focused on developing their networks in specific geographies. These new lending institutions have developed innovative processes to expand target clientele – referral systems integrated with the supply chain, systematic cluster-based approaches, direct marketing, and strategic relationships with other institutions which work with the same target clientele.

For a huge and diverse country like India, ensuring financial access to fuel growth and entrepreneurship is essential. The rise of such specialized players and systems will definitely change the way of banking in the country. This will pave a strategic path ensuring sustainable growth for NBFCs over a long term. Further, as more and more consumers are taking the digital mode of transacting and trading, and availing emergency cash immediately, the digital wave could potentially open up new avenues for growth.

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