“The share of NBFCs’ assets in GDP stood at 12.5% as on March 31, 2013, increased steadily from just 8.4 per cent in 2005-06. As per the balance sheet growth, the sector on an average witnessed 22% growth, most of the years, NBFC sector grew faster than banking sector.
NBFC credit grew faster than banks during the period March 2007 to March 2013, the compound annual growth rate (CAGR) of 24.3% for NBFCs and 21.4% for banks”, mentioned Mr. Bhaskar while inaugurating Assocham National Summit on “Non-Banking Finance Companies – Game Changers” organised by The Associated Chambers of Commerce and Industry of India (Assocham).
While addressing the conference J.D. Seelam, Minister of State for Finance (Revenue), said that NBFCs should play a bigger and a pivotal role in lending to the priority sector. He further said that there is also scope to see as to how NBFCs can play a role in lending to the sectors where banks are not interested or hesitant.
Addressing the conference, he also said that the government is committed to fiscal prudence. “We will not cross the red line of 4.8 per cent of fiscal deficit”, added Mr. Seelam
“The growing inter-connectedness with banks and market, the bank borrowings up from Rs.542 billion as on March 31, 2006 to Rs.2508 billion as on March 31, 2013. The market borrowings are also up from Rs.1009 billion as on March 31, 2006 to Rs.4764 billion as on March 31, 2013”, reveals Mr. Bhaskar.
Mr. Bhaskar further mentioned that NBFC financing to infrastructure increased from Rs.2228 billion as on March 31, 2010 to Rs.4479 billion as on March 31, 2013. He also said, the NBFC finance to infrastructure accounted for 35.8 % of their assets as on March 31, 2013. In case of banks it was 7.6%.
He also stressed upon the role of NBFCs in promoting Inclusive Growth for Microfinance Institutions (MFIs) to provide basic financial services such as loans, savings, money transfer services, micro-insurance etc., to poor villagers and attempt to fill the void left between the mainstream commercial banks and money lenders.
While addressing the conference, Mr. Bhaskar also said, quantum of housing loans provided by the housing finance, NBFCs is almost the same, although housing finance NBFCs comparatively far smaller than the banks.
He also mentioned that MSME sector has large employment potential of 59.7 million persons over 26.1 million enterprises and is considered as an engine for economic growth and promoting financial inclusion in rural areas. The outstanding credit provided by the NBFC sector to MSMEs stood at Rs.625 billion as at end March 2013 (Rs.464 billion in the previous year). The figures for banking sector were at Rs.22,302 billion as at end March 2013 (Rs.19,374 in the previous year).