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Indian Financial System

Notes The NBFCs have helped in bridging the credit gaps in several sectors which traditional
institutions, such as banks, could not fulfill. They have been playing a positive role in
accessing certain depositor segments and catering to specified credit requirements of
certain classes of borrowers. A thriving and growing NBFC is a requirement for the
healthy financial growth of a nation.
As said earlier, there are thousands of NBFC players, many of which are not reported.
Figure 8.1 below gives a picture of the reported NBFCs as noted by the RBI Bulletin, in
March 2011.
Figure 8.1: Number of NBFCs Registered with the RBI in India in 1999-2009

Number of Registered NBFCs Number of NBFCs-D

Source: RBI Bulletin
Note: NBFCs-D pertains to deposit taking NBFCs
8.5.2 Current Scenario of the NBFCs Business

In recent years, the number of NBFCs once again has begun to decline on account of high cost of
funds, intense competition with the banking sector and increase in consolidation activity. The
number of deposit taking NBFCs (NBFCs-D) fell sharply from 710 as at end-March 2003 to 336 as
at end-March 2009 to 297 as end-March 2011, primarily due to the exit of many NBFCs from
deposit taking activities.

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