Non-Banking Financial Companies Role in India's Development (eBook)

A Way Forward

R. Kannan, K. R. Shanmugam, Saumitra Bhaduri (Autoren)

eBook Download: PDF

2019 | 1st ed. 2019
XXII, 142 Seiten
Springer Singapore (Verlag)
978-981-13-3375-0 (ISBN)

Infos

This book examines the trend and growth of non-banking financial companies (NBFCs), both from balance sheet and regulations view-points. It further investigates the role of NBFCs in furthering financial inclusion, last-mile delivery of credit and their contribution to financial sector.

Since the Reserve Bank of India (RBI) formally recognised the NBFCs in India in 1964, they have increased significantly in terms of size, form and types of products and instruments. They have also managed their asset quality better than banks. Traditionally they were dependent on banks for funds, but after the global financial crisis they began to tap the capital market.  Concomitantly, the RBI regulations have closed the fault lines and tightened rules.

The book assesses whether NBFCs in India should be treated as shadow banks, discusses how to achieve the right amount of regulation and safeguards without unduly stifling the NBFC sector, and studies the funding opportunities and challenges of NBFCs in India. As such, it serves as a basic reference for students in finance, and a valuable tool for professionals such as policymakers and investment analysts and other stakeholders in the finance area.

R. Kannan is an Honorary Professor of Madras School of Economics.  He retired as Principal Advisor at the Reserve Bank of India after 30 years of service.  While at the RBI, he was deputed to the IMF as an advisor (1996-2001) and was also an advisor to the Governor of the Bank of Mauritius (1994-96). He was member of the Insurance Regulatory and Development Authority, and was closely involved in writing the BASEL III regulations of selected Asian economies. He has published about 50 papers in various journals encompassing monetary policy, fiscal policy, balance of payments, exchange rate, pensions, economic capital for the life insurance industry, and early warning systems for the life insurance industry. He is currently teaching at the MSE on risk measurement and management, central banking, financial regulations and banking supervision.  

K.R. Shanmugam is a Professor and the Director of Madras School of Economics, specialising in applied economics, public finance, finance and banking. He is also a non-official independent director of ITI limited, a member of the Steering Committee on Research in Environment at the MoEFCC, and member of the Academic Council of the Central University of Tamil Nadu. He has published about 40 research articles in various journals and edited volumes, and has edited five books.   

Saumitra Bhaduri received his Master's degree in Econometrics from Calcutta University, Kolkata, India, and his PhD in Financial Economics from Indira Gandhi Institute of Development Research (IGIDR), Mumbai, India. He currently works as a Professor at Madras School of Economics, Chennai, India, where he regularly offers courses on financial economics and econometrics, and on advanced quantitative techniques. He previously worked at GE Capital, the financial services division of the General Electric Company, and has held various quantitative analysis positions in the company's finance services. He also founded and headed the GE - MSE Decision Sciences Laboratory, where he was responsible for developing state-of-the-art research output for GE. He has also published several research articles in various international journals. His research interests include financial economics and econometrics, quantitative techniques and advanced analytics.

Inhalt

Foreword 6
Acknowledgements 8
Executive Summary 9
Contents 12
About the Authors 15
List of Tables 17
List of Charts 19
1 Status and Role of NBFCs 21
1.1 Non-banking Financial Institutions in India 21
1.2 Legal Definition of NBFC 22
1.3 Classification of NBFCs 22
1.4 Status of NBFCs Vis-à-Vis Banks 23
1.5 Growth Constraints of NBFCs 24
1.6 Shadow Banking and Regulatory Environment 25
1.7 Aims of This Book 26
2 Growth and Development of NBFCs 28
2.1 Size and Ownership Pattern of NBFCs Sector 28
2.2 Financial Performance of NBFCs 30
2.3 Balance Sheet of NBFCs-D 41
2.4 Balance Sheet of NBFCs-ND-SI 54
2.5 Summing Up 55
3 Regulatory Developments and Prudential Norms 56
3.1 Need for Regulation 56
3.2 Tracing the NBFC Regulatory Path 56
3.3 Shah Working Committee 58
3.4 Khanna Committee 59
3.5 Usha Thorat Working Group 60
3.6 Our Suggestions on the RBI Working Group Report 62
3.7 Regulatory Guidelines of the RBI (10 November 2014) 65
3.8 NBFC-Account Aggregator 69
3.9 Peer-to-Peer Lending 70
3.10 Summing Up 71
Appendix 71
4 Acceptability of NBFCs to the Public 80
4.1 Retail Business Growth 81
4.2 Product Differentiation 81
4.3 Procedural Convenience 82
4.4 Effect on Borrowing Capacity 83
4.5 Diluting Obsolescence Risk 83
4.6 Time Tested and Borrower Friendly Appraisal Methods 84
4.7 Summing Up 84
5 Demand for NBFCs’ Credit 86
5.1 Contribution of NBFCs in Meeting Credit Requirements 86
5.2 Credit Demand 87
5.3 Alternative Credit 89
5.4 Summing Up 91
6 Risk Management in NBFCs 92
6.1 Risk Management 92
6.2 Risk Profile of NBFCs 93
6.3 Economic Capital 96
6.4 Interconnectedness Between Banks and NBFCs 96
6.5 Prudential Parameters 97
6.6 Summing Up 99
7 Financial Inclusion and NBFCs 100
7.1 Importance of Financial Inclusion 100
7.2 An Overview of Financial Inclusion in India 102
7.3 Evolution and Progress of Financial Inclusion in India 103
7.4 Micro, Small and Medium Enterprises (MSME) in India 109
7.5 Summing Up 112
8 Banks and NBFCs in India: A Comparative Analysis 114
8.1 Asset Growths of NBFCs and Banks 114
8.2 NBFCs Share of Deposits 116
8.3 Credit Growth: Banks Versus NBFCs 116
8.4 Regional Coverage of NBFCs and Banking Sector 116
8.5 Share in Retail Finance by NBFC’s and Banks 117
8.6 Infrastructure Financing by NBFCs Versus Banking Sector 118
8.7 Profitability of NBFCs and Banks 118
8.8 Risk Involvement of NBFCs-ND-SI in India 119
8.9 Summing Up 120
9 Non-banking Financial Intermediaries: International Experiences 121
9.1 Non-banking Financial Intermediaries 121
9.2 An Overview of Financial Systems of 28 Major Countries 123
9.3 Development and Growth of NBFIs Across Jurisdictions 127
9.4 Interconnectedness Between Banks and NBFIs 129
9.5 Size of Insurance and Pension Funds: A Note 133
9.6 Relationship Between Development of NBFIs, Banks and Growth 136
9.7 Regulatory Regime for NBFIs Across Nations 136
9.8 Summing Up 141
10 Conclusions and Recommendations 143
10.1 Where NBFCs Stand Today 143
10.2 Mooting a Roadmap for NBFCs 146
10.3 Assessing NBFCs’ Strengths 146
10.4 Examining the Regulatory Regime for NBFCs 147
10.5 An Update 154
10.6 Summing Up 155
References 157

Produkt-Details

• Erscheint lt. Verlag: 11.6.2019
• Reihe/Serie: India Studies in Business and Economics
• Reihe/Serie: India Studies in Business and Economics
• Zusatzinfo: XXII, 142 p. 40 illus., 38 illus. in color.
• Sprache: englisch
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Themenwelt: Betriebswirtschaft / Management ► Spezielle Betriebswirtschaftslehre ► Bankbetriebslehre
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre ► Finanzwissenschaft
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre ► Makroökonomie
• Schlagworte: Banking • Development Finance • Financial Inclusion • Interconnectedness with Banks • Investment funds • NBFCs • Non-Banking Financial Companies (NBFCs) • Shadow Banks
• ISBN-10: 981-13-3375-0 / 9811333750
• ISBN-13: 978-981-13-3375-0 / 9789811333750