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In India, NBFCs, or Non-Banking Financial Companies play a significant role in fostering inclusive growth by meeting the various financial demands of people who are not bank customers. Additionally, NBFCs frequently take the initiative in offering Micro, Small, and Medium-Sized Enterprises, or MSMEs cutting-edge financial services that are best suited to their needs as a business. By boosting transportation, employment creation, wealth creation, bank credit in rural sectors, and support for economically underprivileged groups of the community, NBFCs play a crucial role in an economy's growth. Customers are also given emergency services including financial aid and direction in insurance-related concerns. A report by RBI Says that NBFCs’ credit to Gross Domestic Product (GDP) ratio boosted from 8.6% in 2012-13 to 12.2% in 2018-19 before moderating slightly to 11.6% in 2019-20 in the wake of the pandemic.
NBFCs contribute to promoting global economic growth by addressing several financial needs.
These financial needs may include:
serving the financial needs of SMEs,
creating more job opportunities,
lending in the local sectors, and
providing financial support to the underprivileged sectors of the overall economy.
The value of NBFC culture is growing quickly and abides by the guidelines established for the Indian Banking industry. Although NBFCs don't require a banking license for their services which include providing a variety of credit lines to their customers, peep-to-peer lending, providing insurance, and stock acquisition.
To provide better services to MSMEs, NBFCs need to be updated with their technology and use the latest technologies and software. Using software for NBFCs can improve the lending business as it:
Helps to increase productivity
Reduces extra workloads
Helps in overcoming operational obstacles
Helps in responding to loan requests quickly.
What are NBFCs?
Non-Banking Financial Companies or NBFCs refers to the company which provides financial services without any banking license.
A corporation organized under the Companies Act of 2013 or 1956 is referred to as a Non-Banking Financial Corporation. A non-banking company that does the business of a financial institution shall be an NBFC, according to section 45-I (c) of the RBI Act.
Additionally, it specifies that the NBFC must be active in the loan and advance industry and acquire stocks, equities, debt, and other marketable securities issued by the government or other local authorities.
Difference between Banks and NBFCs?
Regulated under Banking Regulation Act 1949
Regulated under Companies Act 2013
Transaction services are provided by Bank
Transaction services are not provided by NBFC
Bank create Credit
NBFC does not create Credit
Maintenance of Reserve Ratios is mandatory
Maintenance of Reserve Ratios are not required
Foreign Investment allowed up to 74% for Private Sector Bank
Foreign Investment allowed up to 100%
Types of NBFCs:
The NBFCs are divided into groups based on their activities and liabilities:
Examples of top NBFCs in India:
Bajaj Finance Limited
Mahindra & Mahindra Financial Services
Muthoot Finance Limited
Tata Capital Financial Services
L&T Finance Limited
Aditya Birla Finance Limited
Go through our blog to read more about the Top 20 NBFCs in India.
Benefits of NBFC Software:
Security and Transparency:
For NBFCs, these two factors are always of utmost importance. NBFC software manages databases to maintain security by encrypting databases at a high level. Customers have access to their accounts and the administrator controls which user groups have access to which data in the software. Customers can only access their accounts after having their passwords verified. The program makes operations transparent and is simple to implement.
NBFC Software's strong features allow it to manage complex databases with ease. The software makes it simple to export reports in Excel, Word, or PDF formats for later use. With NBFC software, loan EMI calculations are also simplified and made more precise.
Software for NBFC can be customized to a user's specifications. In addition, the program allows you the option of expanding the system with new capabilities as the business grows its offerings. The availability of personalized mobile applications increases the client's access to services. The likelihood of NBFC expansion is increased by the use of mobile apps and other technical developments in the NBFC industry.
Simple to use:
NBFCs can access their software from any location. As a web-based real-time system, it speeds up reaction times and provides immediate services. Customers receive emails and SMS reminders regarding the due dates. Customers may access the NBFC software instantly, which increases openness in the organization's business practices.
NBFCs always need to adopt the latest technologies and software to serve their customer well. As manual work protocols are mostly ineffective and impactless, using the correct software will always improve productivity.
The cost of NBFC software varies from vendor to vendor, but you must pick the finest one for your organization's requirements.
SynoFin excels in working with NBFCs of all sizes. The wide range of products in its stable ensures that NBFCs can depend on the services given by SynoFin for their digital consulting needs in every stage of their growth. SynoFin is enlarging its horizon or outlook to provide IT solutions to NBFCs.
The product suite includes:
Syno LMS: The most configurable Loan Management System for FinTechs.
SynoLOS: Comprehensive loan origination system for NBFCs.
SynoCRM: NBFC-focused CRM solution with rich workflows
SynoFin Expense: End-to-end solution for managing branch petty cash & employee conveyance
SynoFin Sales: Digital onboarding platform for the field sales team
SynoFin Credit: Mobile app for field credit team for personal discussion
SynoFin Collections: End-to-end collections management system
SynoFin Customer App: Customer app to manage leads & customers from onboarding to repayment
SynoFin BI: Business dashboards with deep drill-down features
SynoCKYC: Integrated solution to manage CERSAI CKYC registration
SynoSupply Chain Finance: Invoice discounting, Vendor finance. End-to-end workflow
SynoFin DocScan: Cloud-based DMS to manage documents with restriction-based access
SynoFin DSA: Mobile and web-based solution for DSAs for better collaboration and payouts
SynoFin Treasury: Treasury management solution for NBFCs
SynoVein-Vendor management: Vendor management suite for FI, RCU, Legal, Technical
SynoDataflow: Middleware to manage enterprise-wide integrations
SynoCDP: Common data platform where we create a data lake for enterprises
Underwriting engine: Business rules engine to quickly configure underwriting rules
Visit SynoFin to know more about us!