MUMBAI, May 7 (Xinhua) -- India's non-banking finance companies (NBFC), also called the parallel banking, has been growing at 15-16 percent over the past five years, NBFC managers said here on Tuesday.
NBFCs have outperformed the formal banking sector, wherein the latter grew by 5-6 percent.
"In the last five years the share of manufacturing industry GDP fell from 79 percent to 72 percent due to the period of non-performing assets which affected the banks' ability to lend. However, the NBFC sector grew from 6 percent to 19 percent, indicating dependency of the economy on NBFCs," said Girish Bhagat, Director of IndiaNivesh Corporate Finance, a NBFC.
Today, about 360 billion U.S. dollars of India's debt is from the parallel banking or NBFCs, which is approximately 20 percent of the money advanced or lending done in India, said Robin Banerjee, Managing Director of Caprihans India Ltd, a manufacturer of Polyvinyl Chloride films.
These managers were speaking at a conference on NBFC, Fintech and Parallel Banking with the theme 'Potential to Transform Financial Services' organized by the Confederation of Indian Industry.
However, India remains under penetrated in terms of finance. While the market has been dominated by a lot of offline players in the past, the future will have the digital players take over, said Kashmira Mewawala, Head Business Development & Chief Ethics Counselor, Tata Capital Ltd, a NBFC.
The NBFCs and the parallel banking sector in India is facing major challenges in the current economic scenario especially with the liquidity crunch, Mewawala concluded.
