NBFIs

NBFIs -are heterogeneous institutions delivering wide variety of financial services and products like mutual funds, insurance products, merchant banking, hire purchase and leasing services, stock broking, underwriting, microfinance, development finance, housing finance etc. The unique feature of the NBFIs is that they have broad client base as they provide different financial services. Conventional financial institutions like commercial banks don’t have such variety of financial services. Besides, the NBFIs (mainly NBFCs) operate mostly in the unorganized segment of the financial market. The NBFIs are innovative in providing new types of financial products catering to the needs of the growing economy. Among the NBFIs, the most important and vibrant segment is the category of NBFCs. They are private sector financial institutions. The RBI’s regulatory umbrella is designed to regulate and control the NBFCs which are important from the perspective of investor’s security, financial stability and development of the economy. After the introduction of reforms in the sector, improvements are visible in terms of the soundness of indicators, like capitalization, asset quality, business performance and sustainability. Deposits mobilization of the registered NBFIs improved considerably after 1997 along with profitability and efficiency.