Several Top-tier NBFC executives have preferred to switch over to either banks or Fintech or Insurance companies.
Cause and the Effects:
- NBFCs are presently facing a severe liquidity crisis after IL&FS default
- Professionals are hence compelled to look for stability and switch to safer avenues.
- This has brought out a negative feeling around the NBFC Sector.
- Also, the negotiating power of professionals who are moving out has also taken a hit
- Some have even taken up consulting and entrepreneurship.
- 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.
- To quote a few following persons have moved out of NBFCs.
- Manish Lath Gupta moved from Clix Capital to Uber as Marketing Director-India and South Asia
- Ramesh Viswanathan, left L&T Financial Services and is now the Chief of Bancassurance Officer at Tata AIA Life Insurance
- Further at the top level, recruiting process at around 30 NBFCs have been brought to a standstill.
- Around 30% of such professionals have moved to Fintech or have chosen to move up to other NBFCs.
- Around 30% have moved back to Banks.
- 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.
- 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.