Unmindful of the recent report of Reserve Bank of India, in their Financial Stability Report, that NBFCs reported a decline in growth,  ten of the NBFCs, showed over 18% growth in their Loan books as against a growth of 15% in the 9 Private Sector Banks.  Let us see the special features of such growth:

  1. There is a universal decline in profitability during the FY 2017, by 2.9% whereas these NBFCs have shown a growth.
  2. Micro Finance and AGri linked players have had a bad performance, due to Demonetization whereas these NBFCs have shown a growth of 18%.
  3. Another notable thing is that 9 private sector banks and 12 public sector banks have released their annual reports, which shows a cumulative loan growth of 15% and 3.6% respectively during FY 2017.
  4. The result is that the total earnings of these NBFCs numbered have increased more than half, with their return ratios remaining quite stable.
  5. The productivity part shows that the profitability per employee has grown by 28% whereas the pay pockets of the executives have also gone up by 20% than the previous FY which exceeds that of some of the private bank players.

This results in what?

  1. This shows that NBFCs continue to strive for a more share of Credit Demand
  2. These players have been able to perform well in terms of market returns and the overall valuations they command.


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