NBFCs are key to reaching underserved segments

Non-banking financial companies (NBFCs) are a significant contributor to credit growth, having captured over 20 per cent of the credit pie. Given their reach in the underserved and underbanked sectors, they play a pivotal role in achieving the objective of financial inclusion. Both the government and regulators have recognised their importance, and have been coming up with a number of measures to support credit flow.
 
The recently amended regulation under the co-lending model in the priority sector is one such measure which would help in achieving greater financial inclusion, with the twin benefits of lower cost and better reach arising from the partnerships between banks and NBFCs. But more needs to be done to further improve NBFCs’ ability to