NBFCs are liberal and easy to approach, but that’s not all that they offer; it also offers merchant banking, funding, chit fund, and a lot more. Now, the question is which one is the best? To answer that, here is the list of top 10 Non-Banking Financial Companies in India 2020.
Some of the people have very good knowledge, but some are completely unaware of this important financial field. Also known as the Shadow Banks, the Non-Banking Financial Companies are famous across India as they provide the features of low transactional cost and also because they are very easily accessible. Even though there is a crisis going on in this particular sector, some of the NBFC stocks are untouched and rising high. Let’s have a look at all the top 10 Non-banking financial companies in India this year.
Top 10 Non-Banking Financial Companies (NBFCs) in India
But first, we need to understand what NBFCs are?
As its name suggests, an NBFC is a financial service provider company that does not provide banking services. These companies are a crucial part of a developing nation’s economy, especially when the country is going through the toughest times. Basically, these companies provide financial services to the public, like providing loans for letting people purchase some assets for themselves or use the funds to invest in the security domain, but contrary to other banks, they do not keep deposits from the public. The community of the NFBC withheld to be the third biggest sector in the finance segment of India.
If you want to avail services of any non-banking financial company, you should always authenticate that the company is original and is not running illegally. For this, you can always check the list of registered non-banking financial companies on the official website of Reserve Bank of India. There you can find the certificate of registration (CoR) of that particular company issued by the Reserve Bank. Also, so you should know that the maximum company can offer to its consumers is a maximum of 12.5%.
But what exactly is the difference between a bank and an NFBC?
Since the non-banking financial corporation also lends money and make several investments; hence, they seem to be very similar to the normal banks that we know. But still, there are some differences that you need to know.
- NBFC does not accept any kind of deposits.
- The NBFC is not a part of any payment system and hence cannot claim the cheques drawn on its name.
- Unlike the normal banks, the NBFC cannot provide the facility of any deposit insurance facility or credit guarantee.
Now let us know what types of NBFCs are available in India.
These financial companies are categorized as per the kind of financial activity in which they deal. The different types of NBFCs are:
- Loan companies
- Investment companies
- Microfinance companies
- Asset finance institution
- Core investment companies
- Infrastructure finance institution
- Infrastructure debt fund companies
Furthermore, these companies can also be divided according to the type of liability they have as non-deposit as well as deposit accepting organizations. Here, the deposit accepting companies are the one who accepts deposits from its consumers, and the non-deposit companies are the one who raises their funds through the market only.
Again, the Non-deposit companies are classified into more important companies if the size of their assets is increasing the worth of ₹5 billion. Hence, it is now very crystal clear that these companies are the top part of the economic growth of the country.
One more type of NFBC is the Non-Banking Financial Company – Factors. These NFBC – Factors are non-deposit accepting companies who are engaged with the principal business of factoring.
Mortgage guarantee companies. This type of financial company are the ones in which at least 90% of the turnover is through the mortgage business, or at least 90% of the total income of the company is coming from the mortgage guarantee business. And the total fund owned by the company is ₹ 100 crores.
Top 10 Non-Banking Financial Companies (NBFCs) in India
Now let us have a look at all the top 10 non-banking finance companies of India which are sustaining and standing tall in the market without being disturbed by the ups and downs and crisis that the market is facing.
1. Bajaj FinServ Limited
One of the major parts of Bajaj Holdings and Investments Limited is this Indian finance company which is Bajaj FinServ Limited. This company offers different types of financial services to the public, which includes general insurance, life insurances, and many more in the finance business. It also has the services of gold loans, individual loans, home loans, and business and entrepreneur loans as well. Also, they provide loan facilities, especially for doctors, so that they can enhance their careers.
One of the most key products for which this company has always led to the list of the top companies is the EMI card that it provides to its customers. This card gives the facility of no-cost EMI. This means that there will be no extra amount charged if a person buys anything from any merchant through EMI using the Bajaj FinServ EMI card. These cards are proving benefits to a huge number of customers, especially when people shop from any well-known e-commerce website.
Now since it has its deep roots in the finance business, RBI has also approved of it to get a head start into the credit card business. They are doing pretty well in that business too.
2. Power Finance Corporation Limited
It is one of India’s premium non-banking financial company, founded in 1986. as its name infers, it the most important financial facet of the power sector of India. The status of this company is not less than a Navratna company. Mr. Mukesh Kumar Goel is the CEO and managing director of Power finance corporation Limited.
Because of the services that it provides are unmatched, it has constantly gotten its name listed on the National stock exchange (NSE) and also in Bombay stock exchange (BSE).
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It provides financial support to all the organizations which are directly or indirectly involved in the power generation, as well as transmission and distribution of that power. It is the main financial assistant of all the power projects that are running in India.
3. HDB financial services
HDB is the subsidiary of the Housing Development Finance Corporation Limited (HDFC), which is the parent of one of India’s premium Bank chain which is the HDFC Bank, operating in India since 1994 and is trusted by many Indians. Similar to HDFC, the HDB was launched in the year 2007 to have a specific focus on the financial side of the country, and there can be a separate branch that can deal with the financial requirements of individuals as well as businesses. It provides all the facilities regarding finance like different financial loans, short term debts, and many commercial papers as well as BPO services.
Now HDB is also touching the sky heights and is one of the most trusted non-banking financial companies of India. Currently, HDB has its official branch in 22 states and three union territories across India. This leading company has also been awarded the rating of AAA by the CRISIL and CARE, too, for taking care of its customer needs are providing the best facilities to them.
The HDB has shown the consistent performance of growth ever since it has been established. At the end of the financial year 2018, it was recorded that the company was having a profit rate of 36% as well as its revenue has been increased by 24%, which proves that it is one of the promising financial service providers in the market.
4. Mahindra & Mahindra Financial Services Limited
The Mahindra financial company is also one of the most premium financial service providers across the country, headquartered in Mumbai. But the operation of this corporation is focused on providing financial services to the grounds of India, which are the rural villages. It is the biggest provider of tractor loans in India.
Founded in 1991, with the trust and support of more than 4 million customers, this company has one of the most impressive rates of increase in its profit. It was having a record break percentage of 87% increase in profit in the financial year 2018 – 2019. It has also been listed in both BSE as well as NSE.
Due to its base in the roots of the country, which is rural India, it has managed to survive all the crises going on and even shined out brightly in the dull phase. It is also constantly working in diversifying the locations, and it has an exponential growth geographically. It has more than 1000 branches of itself in India.
Furthermore, it also has two subsidiaries, which are focused especially on rural housing finance and providing services for insurance, respectively. Apart from all this, Mahindra is also involved in vehicle advances, gold loans, home credits, corporate advances as well as working capital advances, etc.
5. Shriram transport finance company Limited
This non-banking financial company is specialized in the funding of commercial as well as business vehicles. This company is India’s biggest asset-based financial corporation. It was founded in the year 1974 and started its operation from Tamil Nadu. It has been offering different types of loans and funds for the various types of vehicles including passenger vehicles, mini trucks, light-duty trucks, heavy-duty trucks, construction vehicles as well as farm equipment too.
But apart from sticking to the particular domain in the transportation services, they have evolved thoroughly. Now this company also deals in general insurance and general protection stockbroking, common assets as well as mutual funds.
6. LIC housing finance
You can count LIC housing finance also in one of India’s prime non-banking financial companies. It was established in the year 1989, and as the name itself infers, this company is specialized in providing home loan services. This is a very trusted corporation because it is a subsidiary of LIC.
LIC HFL also provides the facilities of a loan if you are purchasing any property for a clinic or office space. You can also seek its help if you are going to buy a piece of equipment, which is very costly so that you can get it on loan.
The company’s performance has been reported with a growth of 16.7% in its profit as per the fourth quarter of the financial year of 2018 – 19. At the time of demonetization, when the direct competitors of the company like India bulls and Dewan were plunging because of the currency ban, the LIC housing finance showed pliability due to its huge reserves in the industry. Also, there were very rare fluctuations in the stocks of the LIC housing finance company.
7. Muthoot Finance Limited
With the oldest history in the financial sector, Muthoot finance started its operation in 1888 from a village in Kerala. It all began when a small lender from that village started sanctioning loans to people against the pledge of their gold ornaments. You can say it is the leader of India’s financial market, especially the gold loan sector.
But, It didn’t stick only with the gold loans. It has explored almost all the branches of the finance world and is now dealing with many more services like foreign exchange, wealth management services, tools and travels services, money transfers, etc. Fun fact: You can also purchase gold coins that are sold at the branches of Muthoot finance across the country.
It works with every part of the society, whether they are the small traders, farmers, and vendors in the village or they are the clients of Muthoot finance across the United Kingdom, UAE, and the United States as well. It has also been awarded many prestigious awards for the tremendous job in the financial domain. One of the major initiatives that it started, which is “The Access To Banking and Financial Services,” was awarded the ‘Skoch Financial Inclusion Award’ in 2013.
Since it was started in Kerala, it still has its headquarter there only but is widespread with more than 4400 branches across India. It has also started a subsidiary company, which is the Muthoot Housing Finance India Limited, which specifically deals in the services of home loans.
8. Manappuram finance
Manappuram Finance is one of the well-known gold loan and financial service provider company in India. It is a very old company and its been operating since 1949. This company is the first company to register itself as NBFC with RBI from Kerala.
But they didn’t stick to only one type of financial service, which is a gold loan. They have completely diversified their area of work, and now they also deal in the foreign exchange business. The company never faced any downfall; it has always been on a consistent growth rate. In the very recent records in the financial year of 2019 – 2020, it has registered its growth rate as 35% profits in the first quarter.
9. Tata capital financial services Limited
The Tata Capital Financial Services Limited manages to keep itself at the top of the list of the best non-banking financial corporations in India. It is a subsidiary of Tata Sons Limited and was established in the year 2007.
It is specialized in providing financial services across the domain of retail, corporate, or institutional customers from the country. Tata Capital provides its services in the field of wealth management, infrastructure management, home loans, consumer loans as well as commercial finance help. They also provide the services of Tata cards and are also dealing with leasing services, cleantech finance, asset finance, and private equity.
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With more than 200 branches across India, this company is at a constant rate of growth. The key features that attract the customers are the interest rates that they offer and the availability of easy facilities of instant personal loan approvals. Also, the facility of used car loans that they provide is the main USP of the company. The “Count on Us” campaign of Tata capital was aimed to prove to their customers that they are highly consumer-driven and focused on the ease of their customers.
10. L&t Financial Services
One of the strongest competitors in the field of non-banking financial companies in India is L&T Finance Limited. It was established in 1994 and is headquartered in Mumbai. L&T finance deals in the funding services with various sectors like agriculture, industry, trade, individual vehicle loans, commercial vehicle loans as well as rural and corporate loans. The company enjoys a customer base of more than 10 lakh people in India. It was awarded as the “Company of The Year” by Economic Times Awards in 2010.
The consistent net profit of the company rose by almost 94% in the fourth quarter of the financial year 2018-19 due to which it is now considered to be the most reliable non-banking financial company in India.
If you are planning to avail of the services of any of the NFBC, you should always double-check and read the terms and conditions provided by these companies very carefully before making any final decision. These companies have very strict rules, and everyone who is engaging with them should have a profound knowledge of each regulation.