In the present economic system, Non-Banking Financial Companies are playing a significant role in providing accessible and affordable financial services. The NBFCs are becoming a vital player in financial inclusions indirectly boosting the economy. These companies majorly focus on the business of loans, acquisition of shares, stocks, bonds, debentures and securities allotted by the government, local authority or by other market securities. NBFCs are engaged in maturity transformation and core banking functions. The operations carried out by the NBFCs merely aid threat to growing market thereby leading to the economic development respectively.
Mobilization of Assets
NBFCs allow and provide with the mobilization of resources; funds and capitals. These companies help the mobilization of assets by converting investment into most preferable sets. NBFCs create a balance between intra-regional income and asset distribution. Turning the savings into investment practices, these companies make a wide and strong contribution to the economic development as compared to the traditional bank practices. Such companies work without expecting to gain the maximum profit which clears its idea of economic development and, are also engaged in activities that generate substantial or no revenue. Proper organization of capital will surely help in the development of the trade and industry leading to the economic expansion and progress.
Providing Long-Term Credits
NBFCs play a key role in providing the corporations with funds through equity participation. Unlike other traditional banks, NBFCs offer long-term credit to trade and commerce industry. These companies help to fund large projects and mega infrastructure projects which boost economic development to a great extent. The definition of long-term credit loans is precisely transformed with the emergence of NBFCs. Long-term credit allows sustainable growth and development of economic sector with stable and softening interest rates. NFBCs are also engaging in funding small-scale industries and MSMEs which will create a base for the development and growth of the economy.
Upliftment in the Employment Sector
The operations and policies of NBFCs are uplifting the job scenario. More job opportunities are arising with the influence of these companies in the private as well as government sector. NBFCs help in achieving full employment in the economy by working with the government and investing in the private sectors. Also, the business activities in the private sector provide more employment opportunities and occupation practices due to such non-banking financial companies. These companies go hand-in-hand with the economy where the need for personnel to handle secured operations is high, thereby its enhancing the motive to provide more employment. The NBFCs lead to increase in the capital stock which results in employment growth.
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