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How NBFCs Are Changing the Business Landscape in India

Have you ever applied for a small business loan? A non-banking financial company (NBFC) can help if you want to take an MSME loan. NBFCs are RBI Registered organisations providing banking and financial services without a particular banking license. It remains interesting to note that, although such organisations offer traditional financial services, NBFCs are not allowed to accept demand deposits under any circumstances.  

Compared to banks, NBFCs have a better capital reserve besides promoting a technology-based approach. Such organisations are known to keep strong balance sheets and are promoted as strong financial lenders. Financial consultants acknowledge that NBFCs transform the nations’ business landscape by offering financial credit to small managed enterprises. 

NBFCs are known to mitigate lending risks while ensuring a seamless credit supply to business owners. With a better reach towards poverty-stricken markets, NBFCs primarily cater to small business owners, individuals and single business proprietors within a large catchment area.

How NBFCs are transforming the business landscape in India: The Background Story

This is a common question asked by many of the investment experts. However, experts reveal that NBFCs provide credit to business owners on a minuscule scale to help such businesses grow. Thus, such organisations improve the cash flow in rural and sub-urban markets and relate to lifestyle improvement for many small business owners. 

At the same time, NBFCs also provide credit to large businesses. Such organisations contribute significantly to the long-term funding procedures implemented and necessitated by the management of big corporates. With a sincere emphasis on infrastructure development across the country, NBFCs play a significant role in shaping the overall business landscape, as experts have acknowledged.

Do you know that NBFCs play an important role in supporting the business growth of small-managed enterprises? Such organisations have a boutique range of financial product/s, including the following:

  • A small business loan for small-scale business operators
  • Working Capital Loans for SMEs to ensure growth phase-wise. Such business growth depends on the nature of the business and the market metrics as well
  • machinery and trade finance, particularly helping the businesses to expand their business operations across markets

Overall, the NBFCs have been observed to provide a strong credit-to-GDP ratio, which remained quite impressive during 2021. Overall, NBFCs play a crucial role in a growing economy through sustainable loan applications that promote an optimal interest rate. Business owners across the country are known to benefit through: 

  • An improved infrastructure and transportation systems,
  • employment generation, 
  • wealth creation, 
  • Substituting bank credit in profound rural segments across the economy
  • support sections of the society, especially those that are financially weak

What are the types of loans disbursed by the NBFCs?

Interestingly, NBFCs offer loans for retail business enterprises and commercial brands. Loans are offered in terms of the following instruments.

  • Easy Monthly Installment Schemes
  • Loans to purchase vehicles, trucks, tractors, etc.
  • Home Loans
  • Business Loans

However, it is necessary to note that NBFCs have nodal authority to control such processes. Reserve Bank of India (RBI) remains the nodal authority in guiding the NBFCs towards a fruitful performance. Financial consultants acknowledge that RBI has the power 

To regulate and control the Non-Banking Financial Companies. According to the RBI Act, RBI can impose and exercise 

  • Surveillance on NBFCs
  • Supervise the functions and processes of NBFCs 
  • Inspect and authorise credit monitoring through NBFCs 
  • issue procedural directions and guidelines
  • Formulate business-friendly policies 
  • regulate and control the functions of the Non-Banking Financial Companies (NBFCs).

How can you apply for a business loan through NBFCs?

A procedural MSME loan application needs to be well documented. The owner of the business should be able to provide the following documents:

  1. Registered address proof of the premises related to the business operation
  2. The Aadhar card and Voter’s ID card of the business proprietor
  3. Income Proof along with TDS declaration
  4. Proof of Age


NBFCs play a critical role in extending short- and long-term credits to various businesses. Such loans can also be disbursed to small-managed companies or large corporations. NBFCs ensure growth across multiple market segments and the national economy. Such organisations play a crucial role in markets where penetrations of banks remain low. 

Lending huge opportunities in microfinancing, such credit lending institutions play a critical role in shaping the broader segments of the Indian economy. Building up a lucid financial ecosystem, NBFCs play a determining role in improving small managed businesses, mostly run by one or two individuals within a competitive market.

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