Technology Adoption Key To NBFC Success

After a tough period of survival, the NBFCs are back in the reckoning with improved system liquidity and strong capital buffers that have helped majority of NBFCs to disburse loans

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The NBFC sector plays a pivotal role in the Indian economy and often the health of this sector is touted to reflect the health of our financial system. Worsening NBFC sector performance also is a harbinger of poor economic realities. Shreya Chaware analyses the NBFC sector’s performance while also sharing its overall outlook

NBFC stocks have taken a backseat at a time when technology and pharmaceutical stocks have begun to dominate since 2020. Come 2021 the buzz was around the commodity stocks and the PSU stocks along with the cryptocurrencies. While the action-packed story of equity markets was earmarked by various sectors that stood to gain from the lockdown and rising raw material prices, the financial sector was amongst the worst hit along with hospitality and travel, and tourism.

What steadied the ship for the financial sector in general and NBFCs, in particular, is the slew of measures announced by the RBI. The decisions to infuse liquidity and some timely tweaks in the way NPAs could be recognized proved to be useful for a majority of NBFCs with good balance-sheet and adequate capital adequacy. After a tough period of survival, the NBFCs are back in the reckoning with improved system liquidity and strong capital buffers that have helped the majority of NBFCs to disburse loans.

NBFC Performance and Outlook