India’s Leading BFSI & FinTech Companies 2024

India’s Leading BFSI and FinTech Companies 2024 30 S ince 2014, NBFCs have played a vital role in filling the credit gap. NBFCs witnessed impressive growth during FY2014-FY2018, with increase in NBFC loans and advances outpacing that of bank credit. However, this also led to exuberant risk taking by the sector as evident from under- pricing of credit. Intensifying competition amongst NBFCs, availability of ample liquidity and capital infusion by private equity players, led to decline NBFC SECTOR OVERVIEW in the credit premium charged by NBFCs over the risk-free yield. Further to reduce their costs of borrowing, they began borrowing short term but lending long term, which led to asset-liability mismatch on their balance sheets. In September 2018, there was default of a prominent NBFC consequent to debt obligations that overwhelmed the entire NBFC sector and also affected the Indian economy. Consequently, in the first half of FY2020, there was a sharp decline in incremental credit from both SCBs and NBFCs. Further, even as the NBFC sector was struggling to recover from 2018 crisis, the country was hit by the nationwide lockdown in response to the COVID-19 pandemic. This significantly disrupted the economic activity, which had an adverse impact on the NBFC sector in terms of constrained availability of funding as well as growth in NPAs. Dun & Bradstreet