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A Comparative Study Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | 1 Table of
Contents EXECUTIVE
SUMMARY................................................................
................................ .................. 3 CHAPTER-1
INTRODUCTION................................
................................................................ ......... 4 1.1
Types Of NBFC‘s................................................................
................................ ......................... 5 1.2 Regulations of
NBFC‘s................................................................
................................ .................6 1.3 Guidelines for new
deposits................................
................................................................ .......... 8
1.4 Responsibilities................................
................................ ................................
........................... 11 1.5 Current
Scenario................................................................
................................ ......................... 12 CHAPTER-2
Literature review................................
................................................................ ......... 14
2.1 Importance Of
NBFC‘s................................................................
................................ ...............15 2.2 Role of
NBFC‘s................................ ................................
................................ ..........................16 2.3 On Global
Crisis................................................................
................................ ......................... 17 CHAPTER-3RESEARCH
METHODOLOGY................................ ................................
............... 18 3.1 RESEARCH
DESIGN................................................................
................................ ................ 19
3.2 Objective................................ ................................
................................................................ ..... 19
3.3 SCOPE OF THE STUDY................................
................................................................ ........... 19
3.4 data collection................................
................................ ................................
............................. 19
3.4.1 PRIMARY
DATA................................................................
................................ ............... 19
3.4.2 SECONDARY DATA................................
................................................................ ......... 19
3.5 Field Work Plan................................
................................ ................................
.......................... 20
CHAPTER-4MAJOR PLAYERS AND SELECTED COMPANY FOR STUDY........................ 21
4.1 LIC HOUSING
FINANCe.........................................................................
.................................
24
4.1.1 Housing Finance Industry................................
................................ .................................... 24
4.1.2 Indian Housing Finance scenario................................
................................ ......................... 25
4.1.3 LIC Housing Finance................................
................................................................ ........... 26
4.1.4 Financial Performance................................
................................................................ ......... 28
4.1.5 Macro Economic Analysis................................
................................ ................................... 33
4.2 Reliance
Capital:................................................................
................................ ......................... 38
4.2.1 Indian
Economy:................................................................
................................ .................. 38
4.2.2 Reliance
Capital................................................................
................................ ................... 39
4.2.3 Financial Performance................................
................................................................ ......... 41
4.2.4 Macro Economic Analysis................................
................................ ................................... 44
4.3 Shriram transport finance................................
................................................................ ............ 47
A Comparative Study Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | 2 4.3.1
ECONOMIC OVERVIEW................................
................................ .................................. 47
4.3.2 COMMERCIAL VEHICLE INDUSTRY OVERVIEW................................
..................... 47
4.3.3 Shriram Transport Finance................................
................................ ................................... 48
4.3.5 Financial Performance................................
................................................................ ......... 49
4.3.4
SWOTANALYSIS....................................................................
...........................................
52
4.4idfc................................
................................................................
................................ ............... 56
4.4.1 Global Financial and Economic Crisis................................
................................ ................. 56
4.4.2 Infrastructure Development Finance................................
................................ .................... 57
4.4.3 Financial Performance................................
................................................................ ......... 59
4.4.5 Macro Economic Analysis................................
................................ ................................... 63
CHAPTER-5 INDIAN BANKS V/S NBFC’S................................
................................ ................... 65 5.1 Top 5 Banks and
NBFCs with highest profitability................................
................................ 67 5.3 Banking versus NBFC regulatory arbitrage
in India................................ ............................... 68
CHAPTER-6 Porter’s five forces................................
................................................................ ...... 70
CHAPTER-7 FINDINGS & MANAGERIAL IMPLICATIONS................................
................... 74 7.1 findings................................
................................
................................................................ ....... 75
7.1.1 Disbursements - Sharp fall during the
crisis................................................................ ........
75 7.1.2 Cost of
Funding................................................................
................................ .................... 77 7.1.3 Asset
Quality................................................................
................................ ........................ 77 CHAPTER-8
RECOMMENDATIONS AND CONCUSION................................
......................... 79 8.1
Recommendation:................................................................
................................ ................... 80 8.2
Conclusion................................ ................................
................................ .............................. 80
REFERENCES................................ ................................
................................ .................................... 82 A
Comparative Study Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | 3 EXECUTIVE
SUMMARY The study presents a comparative study of NBFC’s in India. There are
almost 13000 registered NBFC’s in India. The study is aimed to provide an
holistic view of the NBFC Industry. NBFC fulfills the financial gap by providing
loan at a lower rate of interest. The major players of each field 1) Housing
Finance Industry: LIC Housing Finance.
2) Infrastructure Finance Industry: IDFC
3) Asset Financing: Shriram Transport Finance
4) Composite: Reliance Capital
The study also compared the Indian Banks v/s NBFC. It was found that at even at
the time of the economic slowdown NBFC was more profitable. Porters Five forces
was also used to analyse the industry and to find the competitiveness in the
industry. The industry is not tightly regulated as there are many regulatory
bodies. Hence, there was an important need to study the NBFC as the industry
plays an important role in the financial Services market of INDIA. It is
encouraging that the NBFC sector‘s importance is finally being acknowledged
across FS market constituents as well as the regulator. However, the importance
attached to the sector is often transcending into misplaced exuberance. Over
simplified and vague drivers for NBFC valuations such as strategic fit and
customer base, can never substitute dispassionate business analytics. A rational
assessment of the intrinsic values of NBFCs factoring issues such as past
performance, structural weaknesses of the sector (for instance funding
disadvantages), along with an identification of real capabilities are essential
to ensure that the equilibrium between price paid and value realized is reached
to the extent possible. In the absence of this, India is sure to witness the
re-opening of the NBFC horror story albeit with a new chapter on the erosion of
NBFC investment values affecting investors across categories . A Comparative
Study Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | 4 CHAPTER-1 A Comparative
Study Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | INTRODUCTION 5 A
Non-Banking Financial Company (NBFC) is a company registered under the Companies
Act, 1956 and is engaged in the business of loans and advances, acquisition of
shares/stock/bonds/debentures/securities issued by Government or local authority
or other securities of like marketable nature, leasing, hire-purchase, insurance
business, chit business but does not include any institution whose principal
business is that of agriculture activity, industrial activity,
sale/purchase/construction of immovable property. A non-banking institution
which is a company and which has its principal business of receiving deposits
under any scheme or arrangement or any other manner, or lending in any manner is
also a non-banking financial company (Residuary non-banking company). NBFCs are
doing functions akin to that of banks; however there are a few differences:
(i)an NBFC cannot accept demand deposits;
(ii) an NBFC is not a part of the payment and settlement system and as such an
NBFC cannot
issue cheques drawn on itself; and
(iii) deposit insurance facility of Deposit Insurance and Credit Guarantee
Corporation is not
available for NBFC depositors unlike in case of banks.
1.1 TYPES OF NBFC’S Originally, NBFCs registered with RBI were classified as:
(i)equipment leasing company;
(ii) hire-purchase company;
(iii) loan company;
(iv) investment company.
However, with effect from December 6, 2006 the above NBFCs registered with RBI
have been reclassified as (i) Asset Finance Company (AFC)
(ii) Investment Company (IC)
(iii) Loan Company (LC)
A Comparative Study Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL |
INTRODUCTION 6 1.2 REGULATIONS OF NBFC’S In terms of Section 45-IA of the RBI
Act, 1934, it is mandatory that every NBFC should be registered with RBI to
commence or carry on any business of non-banking financial institution as
defined in clause (a) of Section 45 I of the RBI Act, 1934. However, to obviate
dual regulation, certain categories of NBFCs which are regulated by other
regulators are exempted from the requirement of registration with RBI viz.
Venture Capital Fund/Merchant Banking companies/Stock broking companies
registered with SEBI, Insurance Company holding a valid Certificate of
Registration issued by IRDA, Nidhi companies as notified under Section 620A of
the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of
the Chit Funds Act, 1982 or Housing Finance Companies regulated by National
Housing Bank. A company incorporated under the Companies Act, 1956 and
desirous of commencing business of non-banking financial institution as defined
under Section 45 I(a) of the RBI Act, 1934 should have a minimum net owned fund
of Rs 25 lakh (raised to Rs 200 lakh w.e.f April 21, 1999). The company is
required to submit its applicationonline by accessing RBI‘s secured website
https://secweb.rbi.org.in/COSMOS/rbilogin.do (the applicant companies do not
need to log on to the COSMOS application and hence user ids for these companies
are not required). The company has to click on ―CLICK for Company Registration
on the login page. A window showing the Excel application forms available for
download would be displayed. The company can then download suitable application
form (i.e. NBFC or SC/RC) from the above website, key in the data and upload the
application form. The company may note to indicate the name of the correct
Regional Office in the field ―C-8 of the ―Annx-Identification Particulars
worksheet of the Excel application form. The company would then get a Company
Application Reference Number for the CoR application filed on-line. Thereafter,
the company has to submit the hard copy of the application form (indicating the
Company Application Reference Number of its on-line application), along with the
supporting documents, to the concerned Regional Office. The company can then
check the status of the application based on the acknowledgement number. The
Bank would issue Certificate of Registration after satisfying itself that the
conditions as enumerated in Section 45-IA of the RBI Act, 1934 are satisfied.
 A Comparative Study Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL |
INTRODUCTION 7 All NBFCs are not entitled to accept public deposits. Only
those NBFCs holding a valid Certificate of Registration with authorisation to
accept Public Deposits can accept/hold public deposits. NBFCs authorised to
accept/hold public deposits besides having minimum stipulated Net Owned Fund
(NOF) should also comply with the Directions such as investing part of the funds
in liquid assets, maintain reserves, rating etc. issued by the Bank. Yes, there
is a ceiling on acceptance of Public Deposits. An NBFC maintaining required
NOF/Capital to Risk Assets Ratio (CRAR) and complying with the prudential norms
can accept public deposits as follows: Category of NBFC having minimum NOF of Rs
200 lakhs Ceiling on public deposit AFC* maintaining CRAR of 15% without credit
rating AFC with CRAR of 12% and having minimum investment grade credit rating
1.5 times of NOF or Rs 10 crore whichever is less 4 times of NOF LC/IC** with
CRAR of 15% and having minimum investment grade credit rating 1.5 times of NOF
*AFC=Asset Finance Company
** LC/IC = Loan company/Investment Company
As has been notified on June 17, 2008 the ceiling on level of public deposits
for NBFCs
accepting deposits but not having minimum Net Owned Fund of Rs 200 lakh is
revised as under: Category of NBFC having NOF more than Rs 25 lakh but less than

Rs 200 lakh Revised Ceiling on public deposits AFCs maintaining CRAR of 15%
without credit rating and Equal to NOF AFCs with CRAR of 12% and having minimum
investment grade credit rating 1.5 times of NOF A Comparative Study Of NBFC in
India2010 ALLIANCE BUSINESS SCHOOL | INTRODUCTION 8 LCs/ICs with CRAR of 15% and
having minimum investment grade credit rating Equal to NOF Presently, the
maximum rate of interest an NBFC can offer is 12.5%. The interest may be paid or
compounded at rests not shorter than monthly rests. The NBFCs are allowed to
accept/renew public deposits for a minimum period of 12 months and maximum
period of 60 months. They cannot accept deposits repayable on demand. The
NBFCs are allowed to accept/renew public deposits for a minimum period of 12
months and maximum period of 60 months. They cannot accept deposits repayable on
demand. NBFCs cannot offer interest rates higher than the ceiling rate
prescribed by RBI from time to time. The present ceiling is 12.5 per cent per
annum. The interest may be paid or compounded at rests not shorter than monthly
rests. NBFCs cannot offer gifts/incentives or any other additional benefit to
the depositors. NBFCs (except certain AFCs) should have minimum investment
grade credit rating. The deposits with NBFCs are not insured. The repayment
of deposits by NBFCs is not guaranteed by RBI. Certain mandatory disclosures
are to be made about the company in the Application Form issued by the company
soliciting deposits. Effective from April 24, 2004, NBFCs cannot accept
deposits from NRIs except deposits by debit to NRO account of NRI provided such
amount does not represent inward remittance or transfer from NRE/FCNR (B)
account. However, the existing NRI deposits can be renewed. 1.3 GUIDELINES FOR
NEW DEPOSITS Customer identification: 'Know The Customer' (KYC) should be the
key guiding principle for identification of an individual / corporate customer
(depositor or borrower). A Comparative Study Of NBFC in India2010 ALLIANCE
BUSINESS SCHOOL | INTRODUCTION 9 Accordingly, the KYC framework should have
two-fold objective, (i) to ensure customer identification and verifying his
identity and residential address; and (ii) to monitor transactions of a
suspicious nature. NBFCs should ensure that the identity of the customer,
including beneficial owner is done based on disclosures by customers themselves.
Typically easy means of establishing identity would be documents such as
Permanent Account Number (PAN), ration card, driving licence, Election
Commission's identity card, passport, et cetera in case of individuals and
registration certificate, partnership deed/agreement, et cetera and other
reliable documents in respect of companies, firms and other bodies.
Verification through such documents should be in addition to the introduction by
a person known to the NBFC. Procedures for existing customers In respect of
existing customers, NBFCs should ensure that gaps and missing information in
compliance of KYC guidelines on customer identification procedure is filled up
and completed before June 30, 2004. Ceiling and monitoring of cash transactions
NBFCs would normally not have large cash withdrawals and deposits. However,
wherever transactions of Rs 10 lakh (Rs 1 million) and above are undertaken,
they should keep record of these transactions in a separate register maintained
at branch, as well as at Registered Office. Such information should be made
available to regulatory and investigating authorities, when demanded. Guidelines
and monitoring procedures The board of directors of NBFCs should formulate
policies and procedures to operationalise the guidelines and put in place an
effective monitoring system to ensure compliance by their branches. Early
computerisation of branch/office reporting will facilitate prompt generation of
such reports and monitoring. A Comparative Study Of NBFC in India2010 ALLIANCE
BUSINESS SCHOOL | INTRODUCTION 10 Internal control systems Duties and
responsibilities should be explicitly allocated among the staff for ensuring
that policies and procedures are managed effectively and that there is full
commitment and compliance to an effective KYC programme in respect of both
existing and prospective customers/clients. Internal audit/inspection Internal
auditors must specifically scrutinise and comment on the effectiveness of the
measures taken by branches / offices of NBFC in adoption of KYC norms and steps
towards prevention of money laundering. Specific cases of violation should be
immediately brought to the notice of head / controlling / registered office.
Record keeping NBFCs should prepare and maintain proper documentation on their
customer relationships and cash transactions of Rs 10 lakh and above. The
records of all such transactions should be retained for at least ten years after
the transaction has taken place and should be available for perusal and scrutiny
by audit functionaries as well as regulators and law enforcement authorities; as
and when required, at the branch as well as at registered office. Training of
staff and management It is important that all the operating and management
staff is made fully aware of the implications and understand the need for strict
adherence to KYC norms. NBFCs may take suitable steps to impart training to
their operational staff on anti- money laundering measures. A Comparative Study
Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | INTRODUCTION 11 1.4
RESPONSIBILITIES The NBFCs accepting public deposits should furnish to RBI i.
Audited balance sheet of each financial year and an audited profit and loss
account in respect of that year as passed in the annual general meeting together
with a copy of the report of the Board of Directors and a copy of the report and
the notes on accounts furnished by its Auditors; ii. Statutory Annual Return on
deposits - NBS 1; iii. Certificate from the Auditors that the company is in a
position to repay the deposits as and when the claims arise; iv. Quarterly
Return on liquid assets; v. Half-yearly Return on prudential norms; vi.
Half-yearly ALM Returns by companies having public deposits of Rs. 20 crore and
above or with assets of Rs. 100 crore and above irrespective of the size of
deposits ; vii. Monthly return on exposure to capital market by companies having
public deposits of Rs. 50 crore and above; and viii. A copy of the Credit Rating
obtained once a year along with one of the Half-yearly Returns on prudential
norms as at (v) above. A Comparative Study Of NBFC in India2010 ALLIANCE
BUSINESS SCHOOL | INTRODUCTION 12 1.5 CURRENT SCENARIO Nearly 11 years after the
last of the two banking licences were issued by RBI to private sector entities,
the government has again started the process of allowing the better-managed non-
banking finance companies (NBFCs) to graduate to full-fledged banks. FM Pranab
Mukherjee‘s Budget proposal on Friday was the first step towards the same. The
second step will be enacted on Tuesday morning. A select group of officials from
top NBFCs, under the aegis of the Finance Industry Development Council (FIDC),
the trade body for NBFCs in India, are meeting R Gopalan, the banking secretary
in the finance ministry, to present a case for select NBFCs to be converted into
full-fledged banks, sources said. About 12-15 NBFCs and corporate houses having
presence in the financial sector are expected to join the race to float a bank.
‗‗The finance minister is convinced that there is a huge need for low-cost
financing at the semi-urban and rural areas in India,‘‘ said a industry source.
The financial services industry believes the Budget proposal was a reflection of

the same. ‗‗In the finance ministry things are moving in the right direction and
the banking secretary‘s meeting proves the same,‘‘ said the source. FIDC office
bearers could not be contacted during the extended weekend. A Comparative Study
Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | INTRODUCTION 13 n the last Union
Budget, the FM had announced that RBI is considering giving additional banking
licences to private sector players, including NBFCs. This was ostensibly to
further financial inclusion and also to improve the size and sophistication of
the Indian banking system. The announcement set the financial markets on fire
with a lot of conjecturing as to who would be the lucky few. The access to
low-cost current account and savings accounts and the ability to offer all
financial products under one roof were cited as major attractions for NBFCs to
rush to seek banking licences. It was also expected that RBI would give new
licences to private players very soon. But, an analysis reveals a different
picture. Neither is RBI in a hurry to issue fresh licences nor are many NBFCs
keen to get into commercial banking. The reasons for this are manifold. RBI
rules are stringent for commercial banks as they are the visible face of the
Indian financial system and commercial banks are primarily the custodians of
public money. RBI places restrictions on commercial banks in their lending
operations. Out of Rs 100 taken in as deposits, approximately Rs 30 has to be
set apart as statutory requirements towards CRR and SLR. This leaves the banks
with Rs 70 to lend. Out of this, 40% has to be statutorily lent towards the
priority sector as defined by RBI. This leaves banks with approximately Rs 42 to
lend at their own discretion. Many NBFCs would definitely find this as
restrictive to say the least. As per the guidelines of 2001, NBFCs seeking a
banking licence should have a minimum paid-up capital of Rs 200 crore, which
must be increased to Rs 300 crore within 3 years of conversion into a bank.
Further, banks have to invest large funds in fixed assets and information
technology primarily to facilitate financial inclusion, risk management, anti
money laundering, etc. These huge capital expenditures increase the payback
period for the investments made. Also, banking-as-a-business model is far more
people-, process- and product-driven than a simple NBFC model. For example, in
order to adopt universal banking, the staff needs to be multi-skilled in banking
functions. So, the operating expenses will be substantially higher, which, in
turn, would reduce the profitability of operations. Also, there are restrictions
on ownership and voting rights. Current stipulations cap voting rights at 10%;
higher rights require the specific approval of... A Comparative Study Of NBFC
in India2010 ALLIANCE BUSINESS SCHOOL | Literature review 14 Chapter-2 A
Comparative Study Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | Literature
review 15 2.1 IMPORTANCE OFNBFC’S According to RBI Non Banking Finance Companies
(NBFCs) is a constituent of the institutional structure of the organized
financial system in India. NBFCs perform a significant and important role in our
financial system. They facilitate the process of channelising of public savings
and provide better return to the depositors. We are aware that due to
liberalization and globalisation, banking industry and financial sector has gone
through many reforms. In the present economic environment it is very difficult
to cater need of society by Banks alone so role of Non Banking Finance Companies
and Micro Finance Companies become indispensable. The activities of non-banking
financial companies (NBFCs) in India have undergone qualitative changes over the
years through functional specialisation. The role of NBFCs as effective
financial intermediaries has been well recognised as they have inherent ability
to take quicker decisions, assume greater risks, and customise their services
and charges more according to the needs of the clients. While these features, as
compared to the banks, have contributed to the proliferation of NBFCs, their
flexible structures allow them to unbundle services provided by banks and market
the components on a competitive basis. The distinction between banks and
non-banks has been gradually getting blurred since both the segments of the
financial system engage themselves in many similar types of activities. At
present, NBFCs in India have become prominent in a wide range of activities like
hire-purchase finance, equipment lease finance, loans, investments, etc. By
employing innovative marketing strategies and devising tailor-made products,
NBFCs have also been able to build up a clientele base among the depositors, mop
up public savings and command large resources as reflected in the growth of
their deposits from public, shareholders, directors and their companies, and
borrowings by issue of non- convertible debentures, etc. According to KPMG
survery The Indian Non Banking Finance Company (NBFC) sector has often been
relegated to the shadows, in most discussions on the Indian Financial Services
(FS) industry. Banks, insurance companies and capital market players take centre

stage and invariably, NBFCs attract public attention only during times of
crisis. Little attention has been paid to the silent but effective manner in
which NBFCs have spread their operations across the country. NBFCs have provided
financial solutions to sections of society who hitherto were at the mercy of
unorganized players for credit and savings products, which A Comparative Study
Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | Literature review 16 were
delivered on economically and socially usurious terms. ronically, in recent
times, NBFCs are once again in the spotlight for their perceived strengths and
capabilities rather than their problems. While this re-rating ought to bring
cheer to a much maligned sector, a degree of caution needs to be instilled
within potential investors in NBFCs, who need to clearly understand the true
drivers of value for finance companies. This understanding is imperative to
enable a better judgment of the intrinsic worth of NBFCs. This article proceeds
to illustrate the key factors responsible for the strong re-rating of the NBFC
sector, as well as discuss the validity of each of these factors, as actual
drivers of value. Today, the NBFC sector is as financially sound as it has ever
been.To an extent, this can be attributed to the very problems affecting the
sector which have resulted in the purging of several players, leaving the
fittest few to dominate the landscape. Taking the Reserve Bank of India‘s (RBI)
definition of ‗reporting NBFCs‘ as a proxy for non-dormant players, a mere 24
NBFCs held 92.7 percent of the total assets of all NBFCs in 2005-2006. The
balance assets, amounting to less than 8 percent of the total, were fragmented
across 439 NBFCs. In addition to this consolidation, at present, NBFCs in
general are well-capitalized with strong parent support. A majority of active
NBFCs reported capital adequacy ratios exceeding 12 percent 2.2 ROLE OF NBFC’S
According to EPW Research Foundation (EPWRFThe Indian economy is going through a



period of rapid financial liberalisation . Today, the intermediation is being
conducted by a wide range of financial institution through a plethora of
customer friendly financial products. The segment consisting of Non-Banking
Financial Companies (NBFCs), such as equipment leasing/hire purchase finance,
loan and investment companies, etc. have made great strides in recent years and
are meeting the diverse financial needs of the economy. In this process, they
have influenced the direction of savings and investment. The resultant capital
formation is important for our economic growth and development. Thus, from both
the macroeconomic perspective and the structure of the Indian financial system,
the role of NBFCs has become increasingly important. The crucial role of Non
Banking Finance Institutions (NBFIs) in broadening access to financial services,
and enhancing competition and diversification of the financial sector has been
well recognized. The main advantages of these companies lie in their ability to
lower transactions costs of their operations, their quick decision-making
ability, customer orientation and prompt provision of services. While NBFIs are
sometimes seen as akin to banks in terms of the products and services offered,
this is strictly not A Comparative Study Of NBFC in India2010 ALLIANCE BUSINESS
SCHOOL | Literature review 17 accurate, as more often, NBFIs play a range of
roles that complement banks. Further, Status Note on NBFCs NBFIs can add to
economic strength to the extent they enhance the resilience of the financial
system to economic shocks. A well developed and properly regulated NBFI sector
is thus an important component of broad, balanced, efficient financial system
that spreads risks and provides a sound base for economic growth and prosperity.
2.3 ON GLOBAL CRISIS According to CARE: NBFC sector faced significant stresses
on asset quality, liquidity and funding costs due to the global economic
slowdown & its impact on the domestic economy. While all the NBFCs were
affected, the impact varied according to the structural features of each NBFC.
Asset-liability maturity (ALM) profiles, type of assets financed and origination
/ collection models followed were the primary differentiators within NBFCs. The
support provided by the Reserve Bank of India (RBI) highlighted the explicit
acceptance of the systemic importance of the sector. FY10 was marked by
re-aligning of the liability profiles, tightening of lending norms coupled with
closing down of many of the unsecured loan segments. On a structural basis, the
sector is now more robust due to the lessons learned by NBFCs from this crisis.
Profitability is expected to be lower than historical levels due to conservative
ALM management, higher provisioning and avoidance of high yielding unsecured
loan segments. However profits are at the same time expected to be much more
stable & less susceptible. A Comparative Study Of NBFC in India2010 ALLIANCE
BUSINESS SCHOOL | RESEARCH METHODOLOGY 18 CHAPTER-3 A Comparative Study Of NBFC
in India2010 ALLIANCE BUSINESS SCHOOL | RESEARCH METHODOLOGY 19 3.1 RESEARCH
DESIGN Since the research is for industry analysis and it is structured for
NBFC‘S. The research uses secondary data for analysIs and interpretation. 3.2
OBJECTIVE The confined objectives of the present study are: To analyze the
market of NBFC‘s in India To study the financials of NBFC‘s 3.3 SCOPE OF THE
STUDY The study was limited to the Financial Service market of India which
included NBFC‘s mainly from the . The study was completed within the time frame
of 60 days(2 months) starting from 1st April, 2010 and ending on 1st June, 2010.
The target group of the study were theNBFC ‘s 3.4 DATA COLLECTION There are two
methods of data collection that can be considered when collecting data for
research purpose. These data collection types include the following: 1. Primary
data 2. Secondary data Both the secondary and primary data collection methods
were used in the study. 3.4.1 PRIMARY DATA The primary data required for this
study was collected by visiting the financial services and analysing the
information provided by them. 3.4.2 SECONDARY DATA The secondary data for the
research was collected from journals, research articles, books and internet
websites, annual reports etc whose details and references has been given in
Chapter- 2 and in ―References . The source of the secondary data was British
Library, NBFC‘sand Internet. A Comparative Study Of NBFC in India2010 ALLIANCE
BUSINESS SCHOOL | RESEARCH METHODOLOGY 20 Secondary data was the main source in
formulating the constructs of ― A comparative study of NBFC‘s in India 3.5
FIELD WORK PLAN The study was conducted in New Delhi (NCR and Bangalore visiting
different institutions and analyzing the different NBFC‘swo rk. A Comparative
Study Of NBFC in India2010 ALLIANCE BUSINESS SCHOOL | MAJOR PLAYERS AND SELECTED
COMPANY FOR STUDY 21 MAJOR PLAYERS AND
SELECTED COMPANY FOR
STUDY
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