A STUDY ON FINANCIAL PERFORMANCE AND GROWTH OF NON- BANKING FINANCIAL COMPANIES

Abstract

The research study titled "A Study on Financial Performance and Growth of Non-Banking Financial Companies (NBFCs)" offers an in-depth analysis of key financial metrics, market trends, and the significant contributions of NBFCs to the Indian economy. Through an examination of various aspects such as the number of reporting companies, public deposits, asset quality indicators, funding sources, and the market leadership of prominent NBFCs like Power Finance Corporation Limited (PFCL), Larsen & Toubro Finance (LTFH), Bajaj Finance Limited (BFL), Shriram Finance, and Muthoot Finance, the research aims to provide insights crucial for stakeholders in the financial sector. The analysis reveals a discernible decline in the number of reporting NBFCs over the years, indicative of sector consolidation propelled by regulatory changes, market dynamics, and intensified competition. Despite this trend, there is a notable uptick in public deposits, signifying enhanced depositor trust in NBFCs, attributed to improved governance practices and regulatory oversight. Asset quality indicators, including the Gross NPA ratio and Net NPA ratio, demonstrate fluctuating trends, reflecting the ongoing challenges and advancements in asset quality management within NBFCs. However, the Capital to Risk-Weighted Assets Ratio (CRAR) consistently maintains a reasonable range, indicating sufficient capital adequacy and resilience. The study underscores the dominance of specific NBFCs such as PFCL, LTFH, BFL, Shriram Finance, and Muthoot Finance across different market segments, highlighting their pivotal roles in fostering financial inclusion, driving infrastructure development, and stimulating economic growth. These NBFCs play critical roles in providing essential financial services, supporting Micro, Small, and Medium Enterprises (MSMEs), and fostering innovation through the adoption of technological advancements. In conclusion, the research offers valuable insights into the financial performance, market dynamics, and growth trajectories of NBFCs in India. These insights are crucial for policymakers, regulators, investors, and market participants to make well-informed decisions and ensure the stability and resilience of the NBFC sector amid evolving economic landscapes.