Q. State the current state of NBFCs in India? What was the impact of the going on downturn in the economy on your business operations?

A. Liquidity problems have eased – availability of credit has improved but the pick up in demand continues to be poor

Q. Most of the industries have been affected by the current downturn and also the default rate has been rising. In such a scenario, what kind of a recovery mechanism has been deployed by your company?

A. The System remains the same but the rigour / follow up has improved.

Q. Would you agree that NBFCs’ share in the overall retail credit disbursements has reduced over the years and that banks have achieved dominance in the retail segment? In your opinion, what were the factors which led to the demotion of NBFCs’ share?

A. This may not be true in all the areas. For example in Commercial vehicle financing still the NBFCs have an edge. Banks have consolidated their position by aggressive pricing and also by buying out assets from NBFCs.

Q. Though NBFCs face tough competition from banks but which are those features of NBFCs which provide them an egde over to banks?

A. Quick turnaround time. Individualised service and understanding their needs. NBFCs reach out to the customers at their door step and this may not be true in the case of Banks.

Q. The gloomed economic scenario has made banks reluctant in lending to NBFCs which has further dried up the sources of funds for the NBFCs. What steps or changes in regulations are you expecting the government to make in order to increase the liquidity condition.

A. This may not be fully true. NBFCs are in a position to access funds from Banks and the limiting factor will be the credit rating of the NBFC

Q. W hat are the challenges faced by the NBFCs? In your opinion, what steps should be taken by the government and RBI in order to provide sustained development of NBFCs in India.

A. In the area of recovery, NBFCs have a disadvantage as the SARFESI act is not applicable to them – This has to change. For the Asset Financing companies, Funds should be made available on a consistent basis at a viable levels from the Banking system.

Q. In your opinion, what would be the factors which would lead to the sustained growth of NBFCs in the long term? Do you think in the long term, there would be some change in the business model of the NBFCs due to strong competition of banks?

A. In the days ahead, NBFCs may be working closely with the Banks partnering them. NBFCs have their niche and Banks cannot replace the NBFCs in entirety. Business model of the NBFcs may change to the extent that NBFCs will have to ensure more revenue from the same customer by adding / offering other services – Eg., Cross selling

Q. State your outlook on the NBFCs for the next two years. Which of the industries would provide sustained and lucrative returns in the long term?

A. The outlook is linked to the growth in the economy. The Asset financing companies will have a stable growth in line with the economic growth. Industries where there could be opportunities are infrastructure financing, commercial vehicles, construction equipments, SMEs, etc.