As per the survey reads India is the second largest populated country in the world. The population consists of rural and urban parts of the country. According to the Census conducted in 2011, nearly 70% of the country’s population lives in rural areas where, unemployment is an issue. The growing population is very crucial for the country’s economy. As the rural population is so high it’s a task to sustain the economy. But with changing times, the rural India has fought back many odds and emerged stronger. Many stories of young entrepreneurs from the rural regions are appreciated and applauded. With limited resources and knowledge, entrepreneurs started running small businesses and are achieving new goals every day. This was possible with the help of Non-Banking Financial Companies (NBFCs).
Non-Banking Financial Companies has flourished in the recent times. NBFCs are financial institutes not holding a business license. The fact that it provides banking services that is not abiding the legal definition of a bank is the reason it catches attention of many. The impact and growth set by NBFC have given rise to organizations ready to invest in it. Establishment of such organizations has majorly helped the economically weaker section of society. Due to the various benefits provided by NBFC, it has become a platform for women entrepreneurs to build up their business.
NBFCs is registered under the Companies Act, 1956.It is divided into two main categories which include NBFCs accepting public deposit and NBFCs not accepting public deposit .The services provided by NBFCs are unlimited. NBFCs include Asset Finance, Investment, Loan, Infrastructure Finance, Systemically Important Core Investment, Infrastructure Debt Fund and Non-Banking Financial Company-Micro Finance Institution.
Protocols to Run the System
NBFC must be registered with the Reserve Bank of India (RBI) and have fixed legal authorization to accept deposits from the public. It is obliged to exhibit the Certificate of Registration or a certified copy at the registered office. The registration of NBFC with the RBI solely authorizes it to regulate the business of NBFC.RBI is not responsible for the repayment of deposits approved by NBFCs. NBFCs is strictly forbidden from using the name of RBI in any manner while regulating their business. The Certificate of Registration is an application which is requested by NBFCs .If the Certificate of Registration gets rejected or cancelled by the RBI then it does not authorize to accept new deposits or renew existing deposits.
Contributing to Sustain Economy
The role of NBFCs is extremely significant to an economy, where a large part of the population still lives in rural areas with little access to financial services and benefits. The role of NBFCs as productive intermediaries has been well recognized and acknowledged. The core strengths of NBFCs lie in powerful customer relationships, sharp grip on regional dynamics and customized services. Lending money against securities and microfinance and have been extending credit to retail customers in under-served areas and to unbanked customers.
NBFCs have benefited many young entrepreneurs to perform without constant pressure in order to make their dreams come true. NBFCs are not just serving young lads but also to women entrepreneurs. Women in rural India are no longer dependable. They have shattered all the barriers of social norms and emerged with flying colors. Be it small businesses like vegetable or fruit vending or setting up a ready-made garment shop. Women are gradually becoming great personalities and inspiring everyone around them. With their successful business, women are supporting their families and contributing towards social welfare.
Escalating with Time
NBFCs have emerged in various sectors and are playing important roles in the Indian economy. The specific roles of NBFC are developing sectors like transport and infrastructure, help to increase wealth and providing finance to economically weaker section. NBFCs have expanded in every possible ways across the country and have 13,000 members registered with them. Nearly 600 NBFCs receive public deposits and the finances assets worth 15000 crores annually. With these stats NBFCs are providing good quality finance to various sectors.
NBFCs are already known as the game changers, as it has set an impact for financial incorporation, microfinance, reasonable housing, vehicle finance, gold loans and infrastructure finance. NBFCs can play a key role by going forward, in closing the loop as regards financial incorporation for individuals and Micro, Small and Medium Enterprise (MSMEs). NBFCs have reached to various financial products offered by the security industry which are shares, mutual funds, and depository services etc.
As NBFCs have specialized performers, in the future the companies are capable of solely changing the banking value chain to enhance the sustainable growth of the economy in rural areas for the long run.