What do entrepreneurs, professionals, and working-class people have in common? They’re all parts of the Indian population that have historically had trouble accessing traditional bank loans. Today, many of them turn to a lively sector that works alongside banks, called Non-Banking Financial Companies (NBFCs), to meet their financial needs.
In the financial landscape, NBFC companies in India have grown from small players to key institutions, holding about a quarter of all bank credit. There are around 9,420 registered NBFCs, and their assets are expected to surpass ₹48 lakh crore by FY25. This sector has become a vital alternative source of credit, supporting India's economic growth and helping those who often fall outside the mainstream financial system.
The Reserve Bank of India (RBI) defines NBFCs as companies registered under the Companies Act of 1956 or 2013 that mainly focus on financial activities like offering loans, buying securities, leasing, hire-purchase, and insurance. However, this technical definition doesn't fully capture their real significance.
The key point is what RBI calls the "50-50 test." A company is considered an NBFC if more than half of its assets are financial, and more than half of its income comes from those assets. This rule ensures that only companies deeply involved in financial activities are regulated by the RBI.
What really makes NBFCs stand out is how they operate: quick decisions, little paperwork, and a customer-first approach. They’re often more flexible than traditional banks, allowing them to serve niche markets and customers that banks find too small or difficult to reach.
While both NBFCs and banks offer financial services, they play different but important roles.
Demand Deposits: Unlike banks, NBFCs can't take deposits from people who want easy access to their money, like checking or savings accounts, because they are not part of the official payment and settlement system.
Payment System Participation: NBFCs can't write checks on themselves or be involved in the clearing system.
This means that different types of lenders have different ways of working. NBFCs are experts in certain areas and with certain types of customers. They create special ways to evaluate and approve loans, which help people who might not get credit from regular banks.
The non-banking financial companies in India have shown strong growth and resilience, now a huge industry worth over ₹48 lakh crore and still expanding rapidly. Here are some signs of their growing presence:
NBFCs are expected to grow by about 15-17% annually until FY28, which is faster than their past decade's average.
About 58% of their lending now goes to retail customers, especially in areas like consumer durables, gold loans, and personal loans.
Investors have shown lots of confidence, with private sector investments reaching a record US$9 billion in the first half of 2025.
This growth shows how NBFCs are reaching new markets and finding trustworthy borrowers using new ways to assess credit, different from traditional banks.
The NBFC sector is changing its approach. After new rules in 2023-24, which made unsecured consumer loans riskier, many NBFCs are shifting focus to secured assets. Smaller fintech NBFCs are pulling back from unsecured business loans and looking to sell or bundle existing unsecured assets.
This shift shows that the industry understands that steady growth depends on carefully managing risk. The numbers support this: from June 2023 to June 2025, the percentage of very low-risk borrowers in NBFC-fintechs increased from 20% to nearly 29%, while high-risk borrowers dropped from about 38% to less than 29%. This suggests that lenders are now better at assessing risk and practicing more disciplined lending.
NBFCs like Indel Money do a great job of helping more people get access to financial services. They are especially good at reaching parts of the population that regular banks often struggle to serve profitably.
Microfinance Institutions: Non-Banking Financial Companies-Microfinance Institutions (NBFC-MFIs) have done better than banks in microfinance, especially after the Reserve Bank of India lifted the limits on how much they can charge in interest. This change allows them to set rates based on the risk involved, which helps them stay sustainable.
Rural Outreach: Some companies like Indel Money have set up large networks in small towns and villages in India. They give loans to people who might not have access to regular banks.
MSME Financing: NBFCs are important sources of funding for small businesses. Companies like Indel Money create specific financial products to help these businesses grow.
This focus on inclusion isn't just about being kind; it shows a smart understanding of India's population and economy. Many growing parts of the country haven't been well served by banks before, and now it's becoming clear that future growth will come from these areas.
As we look toward the future, several trends will define the next phase of evolution for India's NBFC sector:
Digital Transformation: Using data analysis will make lending easier and faster. Some non-banking financial companies (NBFCs) already look at different types of data to decide who gets credit. Recently, the Reserve Bank of India (RBI) hasn't mentioned revolving credit lines in its drafts, which may mean they are cautious about certain online lending options.
Green Financing: More and more NBFCs are investing in eco-friendly projects like electric cars and renewable energy, supporting the country's goals.
Regulatory Evolution: Starting in April 2027, implementing expected credit loss (ECL) provisioning will help NBFCs improve how they manage risks. This will encourage many of them to tidy up their financial records ahead of time, making everything clearer and more organized.
Consolidation and Specialization: The industry will probably keep merging bigger, especially as rules like higher net owned fund requirements make it more important to have a larger scale.
The government's rules seem designed to balance progress and stability, promoting new ideas while keeping things safe, encouraging everyone to participate while being careful. India's NBFCs (non-banking financial companies) are no longer just an alternative to banks; they are now a key part of a diverse and strong financial system.
As India aims to become a $5 trillion economy, NBFCs will be even more important in driving fair and inclusive growth. They combine the discipline of formal finance with the understanding of India's unique needs, making them crucial for the country’s development. They’ve shown that making money and helping people access finance can go hand in hand, through innovation and smart operations, they can build sustainable businesses while empowering more people financially.
When an urgent monetary need emerges, individuals often find themselves struggling to find the right resources to solve their immediate financial crisis. Two of the most popular options that are considered during the rise of such desperate situations are: the early withdrawal and liquidation of fixed deposits (FDs) or taking a secured loan against gold assets. Even though both these channels can be viewed as possible solutions that deliver quick access to cash. But, securing a gold loan is considered a more tactical and prudent roadmap to harnessing financial liquidity when compared to breaking an FD.
In this blog, Indel Money, one of the most popular Non-Banking Financial Companies (NBFC) in India, explores the reasons why taking a Gold Loan is a better solution than breaking your Fixed Deposit to solve immediate financial requirements.
For the common man, a fixed deposit is viewed as the most safe and reliable financial instrument for long-term wealth creation and assured yields. But, if a fixed deposit is subjected to premature withdrawal prior to its date of maturity, it can give rise to adverse financial outcomes in the long run. Firstly, a penalty for early withdrawal is imposed on the account holder by many banking and financial institutions, this can cause a dent on their return of investment (ROI) and will reduce the final amount they will receive.
Secondly, the initial interest at which the money was deposited will be fully relinquished, and a drastically reduced interest rate that aligns with the shorter period the money was parked as a fixed deposit, will be prioritized by the bank. On top of this, long term financial ambitions will be negatively affected by premature liquidation of a capital base. If an FD that has been existing for a considerably long period of time with high interest rates is prematurely drawn down, a highly viable and reliable mechanism to accumulate wealth is gone forever, especially if the interest rates in the market are at a low during time of liquidation.
Conversely to the withdrawal of a fixed deposit, a gold loan is designed as a safe, secure asset-backed credit facility where the borrower has the right to keep the ownership of the asset. Passive gold assets can be leveraged as collateral to harness monetary liquidity. Since the loan is secured by physical assets that hold inherent and substantial value, the need for levying premium and inflated interest rates in order to mitigate lender risk is completely bypassed.
By opting for a gold loan, the fixed deposit will remain intact and untouched. This allows the investment corpus to generate interest income without any hassles and thus, ensuring that wealth creation is not interrupted or compromised. The borrower’s financial hole will be filled purely by the means of temporary liquidity, and long-term savings shall remain unbroken. Once the debtor pays off the loan in full along with the accumulated interest, the pledged gold will be returned to the owner.
In the vast ecosystem of corporate financing, distinctions are often drawn between regular commercial credit systems and specialized funding structures. When analyzing the difference between loans for Micro, Small, Medium Enterprises and standard business loans, significant variations in operational and structural characteristics become more evident. For entrepreneurs struggling to find a way around these options, organizations such Indel Money have designed specific strategies and frameworks that align with their distinct financial needs.
In this blog, Indel Money, one of the most popular Non-Banking Financial Companies (NBFC) in India, explains what makes small business loans in India different from Regular Business Loans, and what purpose they serve to both entities.
Business loan providers in India set up Normal business loans for reputed corporate houses that generate a substantial turnover every year, can produce multi-year financial statements and records and also possess an extensive, long standing history of credit. In a regular scenario, the eligibility criteria to avail standard commercial loans are often very tight and stringent. It is a process that requires a strong trial of documents and a clean and proven track record of large scale business operations.
On the other hand, MSME loans in India are purposely curated to cater to enterprises with smaller market presence and asset infrastructure. Under the lending policies laid down by most banks and non-banking-financial corporations (NBFCs), the eligibility of an MSME to secure a business loan is governed by government-defined thresholds for investment in plant, machinery and equipment, alongside their annual revenue limit. This structure enables many small business enterprises which might have been disqualified to avail corporate loans or credit facilities due their size or limited operational history to gain access to the capital required for growth.
The primary point of variance between these two financial instruments is how they view and examine security. Most conventional business loans heavily rely on high value collateral to access immediate financial liquidity. In order to secure commercial credit lines, companies resort to pledging corporations that hold high value, and in most cases this can be real estate, heavy industrial machinery or capacious fixed deposits.
In contrast, MSMEs funding is mostly structured with flexible and lenient collateral requirements in order to stonewall small businesses being pushed out of the market. At Indel Money specific loan products, including gold loans for funding business ambitions are leveraged for the same purpose. By employing gold assets as security, the need for comprehensive property examinations and exhaustive asset audits are completely eliminated. This unique approach allows small business owners to lay their hands on capital according to their readily available assets rather than vast corporate portfolios.
Due to the large amount of funds involved, the administrative pathway that is required to harness conventional commercial capital is extremely complex and notoriously painstaking, regular business enterprises go through multiple processes right from underwriting, risk management, and long standing legal verifications. As a result, a lot of time can pass by between the approval and the final release of the loan amount.
Since financial crunch is a common occurrence in small scale businesses, MSME loans are designed for quick delivery and instant access, and processing mechanisms at Indel Money are engineered and streamlined to ensure the prompt release of funds without excessive delays. When a loan backed by gold is utilized by MSMEs, the processing pipeline from valuation to approval can be done within a few hours, and thus allowing small scale businesses fulfil running costs, minimize inventory shortages, and harness the next best growth opportunity without the bottlenecks and obstacles associated with a traditional corporate loan.
