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United News of India
4 days ago
- Business
- United News of India
India's transition to service-based economy behind growth surge: Research
New Delhi, July 15 (UNI) India has achieved a progressive growth outlook after the pandemic period, as it was almost over 8 per cent annually between 2021-2024. Over the past three decades, the country had a stable growth rate of 6 per cent annually. This optimistic growth rate and favourable economic prospects not just lifted millions of people from poverty but also made an economic transition from an agrarian-based economy to a service-sector-focused economy. Unlike some West and East Asian economies, which have initially focused on industrial expansion by drawing labor from the agricultural sector. India has made strong data-driven growth in terms of PPP (Purchasing Power Parity). Purchasing Power Parity or PPP refers to the economic theory used for comparing the relative value of currencies between different countries or economies. It considers a common basket of goods and services in each country. India's PPP or Purchasing Power Parity accounted for about 8.3 per cent of the Global Gross Domestic Product or GDP in 2024. The same Purchasing Power Parity was at the mark of less than 3.5 per cent in the 1990s. Currently, India is contributing to almost 17 per cent of the global economy, and the International Monetary Fund or IMF recently shared the data about the contribution to rise almost 20% in the upcoming five years. Now, the Indian economy is standing in the 4th position. The significant rise of the service sector in the Indian economy also marked a phase of growth. Agricultural share in the Indian economy declined to 20 per cent in 2024 compared to the 30 per cent of 1990s. Moreover, the contribution of the service sector has grown to the mark of 55 per cent in 2024. This surge of the service sector is driven by massive sectoral investments, including IT or Information Technology, Finance, or Travel and Tourism. India's base of educated middle class has become a prime source of leading the country in the realm of digital outsourcing. Behind these optimistic prospects, there's much to look at in the macroeconomic policy framework followed by India, such as the adoption of a flexible inflation target regime in 2016 as part of the monetary policy. Besides this, the financial sector reforms focused on expanding the banking capacity, and monitoring Non-Banking Financial Companies or NBFCs have contributed to this economic surge. UNI SAS AAB
Business Standard
10-07-2025
- Business
- Business Standard
Gross loan advances by Non-Banking Financial Companies have doubled over last four years says FM
Union Finance Minister Nirmala Sitharaman has highlighted that the loan recovery practices of Non-Banking Financial Companies (NBFCs) must be conducted in a fair, empathetic and respectful manner, as well as strictly aligning with the RBIs Fair Practices Code. FM stated this while addressing the NBFC Symposium 2025 in New Delhi. The Minister said that financial inclusion cannot be used as a pretext for financial exploitation. She added that lending should be based on the genuine needs and repayment capacity of customers. The Minister also underscored the need for NBFCs to integrate governance, risk management, and customer protection as part of their core beliefs and ethics. Finance Minister Nirmala Sitharaman revealed that gross loan advances by Non-Banking Financial Companies (NBFCs) have doubled over the last four years, surging from Rs 24 lakh crore in March 2021 to Rs 48 lakh crore as of March 2025. The finance minister emphasized the growing significance of NBFCs in Indias financial landscape, particularly in serving segments historically excluded from formal credit systems.
India Gazette
10-07-2025
- Business
- India Gazette
Loan recovery practices of NBFCs must be fair, respectful: FM Sitharaman
New Delhi [India], July 10 (ANI): Union Finance Minister Nirmala Sitharaman emphasized that the loan recovery practices of Non-Banking Financial Companies (NBFCs) must be fair, respectful, and empathetic, and must strictly align with the Reserve Bank of India's (RBI) Fair Practices Code. Speaking at the NBFC Symposium 2025 held in New Delhi on Wednesday, the minister urged NBFCs to avoid harsh recovery measures, especially in cases involving small loan amounts, and reminded them of the importance of customer dignity. 'Recovery practices of NBFCs must be fair, empathetic and respectful, in strict accordance with the RBI's Fair Practices Code,' Sitharaman said. She noted that sometimes media reports highlight harsh recovery actions taken for very small loan amounts like Rs 500. 'Sensationalized reporting in the media, which they are right in reporting. I don't fault the media at all on this. Where harsh measures are taken for recovery of a 500 rupee. heartbreaking stories come out,' she said. The minister added, 'I know for you it's important and it's part of your duty, but it's not part of your duty to be heartless. You need to have better Fair Practices Code, aligning with RBI's Fair Practices Code. So the same message, the push for growth should not come at the expense of customer well-being.' She also raised an important issue regarding the role NBFCs can play in supporting the banking sector's priority sector lending goals. The minister pointed out that every year, a substantial amount of funds allocated for priority sector lending by banks remains unutilized. These unutilized funds are then transferred to institutions like NABARD and SIDBI. 'In the last few years, I have been closely monitoring how public priority sector lending activities of the banks are going on. Every year you have substantial amount left behind, which then gets refilled to NABARDs of the world and SIDBIs of the world,' Sitharaman said. She questioned the logic behind returning these funds to financial institutions when they could be disbursed to the people who need them on the ground. 'Collectively, if you put together all the public sector banks, they have a certain number of branches all over the country. NABARD has far less than that. What's the logic? Why should the priority sector lending money be coming back to the secretary? It should be in the ground with the people for whom it was meant,' she added. The minister proposed that NBFCs, which often operate at the last mile, could be co-opted by banks as partners to improve the priority sector lending performance. 'Is there a role that you can actively play through the NBFCs? You and the NBFCs together. Because they are there at the last mile. Can the priority sector lending performance of the banks be improved if you co-opt the NBFCs as your partners in this?' she said. Sitharaman also invited the Reserve Bank of India to offer guidance on how this partnership could be achieved without disrupting prudential norms. She pointed out that the delay in disbursement, when funds return to NABARD or SIDBI and then are re-issued, causes a loss of six to eight months. 'Why should the customer at the end of the day, for whom the government is making this apportionment through the budget, not receive it that year itself?' she questioned. She concluded by stating that the presence of NBFCs should be more effectively used by public sector banks to ensure timely and targeted credit delivery to the intended beneficiaries. (ANI)
Business Recorder
10-07-2025
- Business
- Business Recorder
786 Investments Limited secures three-year license renewal
The 786 Investments Limited said on Thursday that its license was renewed for a period of three years. The company shared the development in a notice to the Pakistan Stock Exchange (PSX). The Securities and Exchange Commission of Pakistan (SECP) renewed the license under the sub-rule of (9) of Rule of 5 of the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003. The company carries out asset management and investment advisory services. 786 Investments Limited was incorporated on September 18, 1990 as a public limited Company in Pakistan. The company is registered as a Non-Banking Finance Company under the Non-Banking Finance Companies Rules, 2003 and has obtained the licenses to carry out investment advisory services and asset management services under the NBFC Rules and Non Banking Finance Companies and Notified Entities Regulations 2008.
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Business Standard
06-06-2025
- Business
- Business Standard
MFI stress to remain steady in coming quarters: RBI's DG Swaminathan
Stress in the microfinance portfolio is expected to stabilise over the next couple of quarters, Swaminathan J, Deputy Governor, Reserve Bank of India (RBI), said on Friday during the post-monetary policy press meet. Meanwhile, RBI on Friday relaxed the qualifying criteria for Non-Banking Finance Companies (NBFCs) to be classified as Microfinance Institutions (MFIs). Under the revised criteria, NBFCs will have to maintain 60 per cent of their assets in the microfinance loan portfolio instead of the earlier 75 per cent. 'The entities predominantly in this segment have already identified, recalibrated their business models, and stepped up their collection methodologies. We have also seen a shrinkage of that portfolio due to this recalibration,' Swaminathan said, referring to MFIs. 'So, maybe over a period of time, over the next couple of quarters, this should stabilise,' he added, cautioning that much will depend on overall economic conditions and income levels, as MFI portfolios remain the most vulnerable segment. 'Q1 (FY26) is likely to see a peak in slippages. The various guardrails put in place by MFIN and Sa-Dhan are expected to benefit the sector in the long run. However, they will cause some short-term pain, which was necessary to clean the system. By Q2 or Q3, slippages should start to moderate. The only caveat is that MFI growth this year is expected to remain muted due to asset quality challenges coupled with slower growth,' said an official from a private bank. According to the CRIF High Mark report, the gross loan portfolio of NBFC-MFIs shrank by 18.2 per cent year-on-year to ₹1.8 trillion at the end of 31 March 2025. Experts said RBI's move to relax the qualifying criteria for NBFCs to be classified as MFIs will allow these companies to diversify into secured assets and continue growth, especially as self-regulatory organisations (SROs) tighten guardrails on the MFI portfolio. 'Reduction in the qualifying asset criteria for NBFC-MFIs shall improve their loan diversification, thereby augmenting their credit risk profile, and shall enable them to meet other credit requirements of their end borrowers,' said A M Karthik, Senior Vice President, ICRA. Ganesh Narayanan, CEO, CreditAccess Grameen, said, 'This policy shift will enable accelerated diversification within our operations, ensuring balance sheet stability and positioning us for robust cross-cycle earnings. The RBI has time and again introduced progressive measures that support the growth of the microfinance sector, creating a more inclusive ecosystem.'
