CHALLENGES FACED BY NBFCs IN INDIA

EXECUTIVE SUMMARY
CHAPTER 1: INTRODUCTION AND DESIGN OF THE STUDY
NBFCs: A HISTORICAL BACKGROUND
NON-BANKING FINANCIAL ENTITIES REGULATED BY RBI
MEANING AND TYPES OF NBFCs
NBFCs Vs CONVENTIONAL BANKS
CLASSIFICATION OF NBFCs BASED ON THE NATURE OF BUSINESS
RECLASSIFICATION OF NBFCs WITH EFFECT FROM 6th DECEMBER, 2006
FURTHER CLASSIFICATION OF NBFCs-ND BASED ON THE SIZE OF THE ASSET
RESIDUARY NON-BANKING COMPANIES
NON-BANKING FINANCIAL COMPANY – MICROFINANCE INSTITUTION (NBFC – MFI)
MUTUAL BENEFIT FINANCIAL COMPANIES (NIDHIS)
CHIT FUND COMPANIES
ALIGNMENT OF THE RBI’s REGULATIONS WITH COMPANIES (AMENDMENT) ACT,2000
LIQUID ASSET SECURITIES OF NBFCs
STATUTORY AUDITORS
ASSET LIABILITY MANAGEMENT
PRIMARY DEALERS
UNINCORPORATED BODIES
SOURCES OF FUNDS OF NBFCs
REASONS FOR POPULARITY OF NBFCs WITH THE CUSTOMERS
RATIONALE BEHIND THE STUDY
SCOPE OF THE STUDY
OBJECTIVES OF THE STUDY
HYPOTHESIS
METHODOLOGY
SOURCES OF THE DATA
PERIOD OF STUDY
STATISTICAL TOOLS USED FOR THE STUDY
LIMITATIONS
CHAPTER 2: REVIEW OF LITERATURE
CHAPTER 3: NBFC REGULATIONS IN INDIA
NBFC REGULATIONS
CREDIT ASSESSMENT MEMORANDUM (CAM)
CHAPTER 4: CRISIS OF NBFC SECTOR
ACTIVITIES AND GROWTH OF NBFCs
IMPACT ON THE SOURCING OF FUND
IMPACT ON THE DEPLOYMENT OF FUNDS
IMPACT ON THE FINANCIAL STABILITY AND SOUNDNESS OF NBFCs
IMPORTANT ISSUES OF THE REFORMS
PROFITABILITY
DEREGULATION OF INTEREST RATES
CREDIT RATING
HYPOTHESIS
BANK CREDIT
ASSET LIABILITY MANAGEMENT (ALM)
THREE PILLARS OF ALM
ANALYSIS OF IMPACT OF FINANCIAL SECTOR REFORMS AND GLOBAL FINANCIAL CRISIS ON
NBFCs USING MULTIPLE REGRESSION ANALYSIS
IMPACT ON THE DEPOSIT OF NBFCs
DEPLOYMENT OF CREDIT – INVESTMENTS AND LOANS AND ADVANCES
EXAMPLE:
IL&FS
DEEWAN HOUSING FINANCE LIMITED
CHAPTER 5: CAMEL MODEL ANALYSIS OF LEADING NBFC COMPANIES IN INDIA
NBFC COMPANIES IN INDIA
PROFILE OF THE SELECTED TWO COMPANIES
ANALYSIS OF TWO COMPANIES (CAMEL)

 CAPITAL ADEQUACY RATIO

 DEBT – EQUITY RATIO
 ADVANCE TO ASSETS RATIO
 GOVERNMENT SECURITIES TO TOTAL INVESTMENTS
 ASSETS QUALITY
 NET NPAs TO TOTAL ASSETS
 NET NPAs TO NET ADVANCES
 TOTAL INVESTMENTS TO TOTAL ASSETS
 MANAGEMENT EFFICIENCY
 TOTAL ADVANCES TO TOTAL DEPOSITS
 BUSINESS PER EMPLOYEE RATIO
 PROFIT PER EMPLOYEE RATIO
 EARNING QUALITY
 OPERATING PROFIT TO AVERAGE WORKING FUNDS
 SPREAD TO TOTAL ASSETS
 NET PROFIT TO ASSETS
 INTEREST INCOME TO TOTAL INCOME
 NON-INTEREST INCOME TO TOTAL INCOME
 LIQUIDITY
 LIQUID ASSETS TO TOTAL ASSETS
 G-SEC TO TOTAL ASSETS
 LIQUID ASSETS TO TOTAL DEPOSITS
CHAPTER 6: SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION
SUMMARY OF FINDINGS
CHALLENGES FACED BY NBFCs IN INDIA

 DEPENDENCE ON BANKS FOR RESOURCES AND IMPACT ON PROFITABILITY

 NO ACCESS TO REFINANCE
 ACCESS TO ECB FUNDING FOR NBFC – AFCs
 NO ACCESS TO SARFAESI FOR RECOVERY FROM BAD LOANS
 DEBT RECOVERY TRIBUNALS
  NO INSURANCE FOR PUBLIC DEPOSITS HELD BY NBFCs
 LIMITED CAPITAL ENHANCING OPTIONS
 REGISTRATION OF NBFCs UNDER STATE MONEY LENDER LAWS BY SOME OF THE STATE
GOVERNMENTS IS RETROGRADE
 INCOMPATIBLE AND DIFFERENTIAL TREATMENT ON MATTERS RELATING TO TAXATION
 INDIRECT TAX ISSUES
 ROADBLOCKS
SUGGESTIONS

 ACTING AS A DISTRIBUTION BACKBONE FOR INSURANCE COMPANIES

 DISTRIBUTION OF MUTUAL FUND PRODUCTS
 PROVIDING COLLECTION SERVICES FOR PORTFOLIOS ORIGINATED BY BANKS AND OTHER
NBFCs
 BUYOUT AND SERVICING OF RETAIL NPA’s
 PROVIDING A SINGLE-WINDOW FOR MEETING THE BORROWING AND INVESTMENT
NEEDS OF INDIVIDUALS AND SME
 LEASING
 IMPROVING CORPORATE GOVERNANCE STANDARDS
 CUSTOMER PROTECTION ISSUES
 GREATER INNOVATION
 WHITE LABEL ATMs
 NEED FOR A SUPPORTIVE LEGAL INFRASTRUCTURE
CONCLUSION