SEVERAL EXECUTIVES MOVE OUT OF NBFCs

Several Top-tier NBFC executives have preferred to switch over to either banks or Fintech or Insurance companies.

Cause and the Effects:

1. NBFCs are presently facing a severe liquidity crisis after IL&FS default
2. Professionals are hence compelled to look for stability and switch to safer avenues.
3. This has brought out a negative feeling around the NBFC Sector.
4. Also, the negotiating power of professionals who are moving out has also taken a hit
5. Some have even taken up consulting and entrepreneurship.
6. Further these executives leaving the industry has almost brought the highly talented personnel moving from Banks or other financial institutions to NBFCs, to a grinding halt.
7. To quote a few following persons have moved out of NBFCs.
   1. Manish Lath Gupta moved from Clix Capital to Uber as Marketing Director-India and South Asia
   2. Ramesh Viswanathan, left L&T Financial Services and is now the Chief of Bancassurance Officer at Tata AIA Life Insurance
8. Further at the top level, recruiting process at around 30 NBFCs have been brought to a standstill.
9. Around 30% of such professionals have moved to Fintech or have chosen to move up to other NBFCs.
10. Around 30% have moved back to Banks.
11. The core skills fit better in a Banking sector or NBFCs than FINTECH which prefers people from telecom, tech and e-commerce areas who also bring marketing and technology capabilities along with them.

Statistics and Details:

• During the last 3 months CVs of around700 professionals with Rs. 20 lakhs plus salaries from about a dozen NBFCs are under circulation in the market.
• Also the reasons attributed for the departure of senior leaders is stoppage of lending and hiring by the stressed NBFCs has brought a negative image of the sector and further there is no immediate turnaround process is foreseen.
• It is also a fact that these executives had spent less than two years of service in their previous organizations.
• During the peak period, the hike in salaries of these executives was around 40% to 50% which has come down now to around 10% to 15%. However, the current turmoil is said to be a temporary passing phase which NBFCs are expected to tide over early.

Conclusion:

• Meanwhile the Government has assured that NBFCs which are sound and reliable should continue to get funding from banks and Mutual Funds without being unduly risk averse.
• Also, the Government has stated that the Regulatory Authorities viz the RBI would be strengthening the NBFCs functioning.
• Some executives who have moved out of Banks to NBFCs with hefty pay pockets are not interested to shift with a fond hope that the position will improve.