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The Reserve Bank of India (RBI) in its report on Trend and Progress of Banking in India 2020-21 has said that non-banking financial companies (NBFCs) are expected to remain buoyant going ahead, with the increased pace of vaccinations and the broadening revival of the economy. It said the COVID-19 pandemic has tested the resilience of NBFCs, but so far, the sector has emerged stronger with reasonable balance sheet growth, increased credit intermediation, higher capital, lower delinquency ratio and enlarged liquidity cushions. 

According to the report, the financial system is maturing from a bank-dominated space to a hybrid system, wherein non-bank intermediaries are gaining prominence. The developments in the sector in 2020-21 are a harbinger of even brighter prospects in the years ahead. It said various policies in the aftermath of the pandemic ensured liquidity support, moratorium and asset classification standstill eased financial conditions and gave NBFCs adequate time and wherewithal to weather the shock and leverage on their grass-root level reach to channelise credit to productive sectors and revive growth. Many NBFCs have adopted strong credit risk assessment frameworks to ensure the quality of credit creation.

The report further said housing finance companies (HFCs) also took several proactive steps to counter the impact of COVID-19 and ensure continuity of business during the lockdown by resorting to digitally-enabled services for sourcing, processing, and disbursing loans. Going forward, given the growing population and the under-penetrated market, affordable housing finance has huge potential.