(CAFRAL) Released its First Flagship India Finance Report 2023

In the ever-evolving landscape of finance and economics, staying informed about the latest trends and developments is crucial. The Centre for Advanced Financial Research and Learning (CAFRAL) has taken a giant leap in this direction by releasing its first flagship India Finance Report for the year 2023. This comprehensive report delves deep into the theme of "Connecting the Last Mile: Non-Banking Financial Companies (NBFCs) in India," shedding light on vital aspects of this sector that are driving change and innovation.

Understanding the Role of NBFCs

What are NBFCs?

Non-Banking Financial Companies (NBFCs) are a distinct category of financial institutions operating in India. These entities are registered under the Companies Act of 1956 and provide an array of financial services that are typically associated with traditional banks. However, unlike traditional banks, NBFCs do not hold banking licenses.

The Delayed Impact of Monetary Policy Transmission

One of the key highlights of the CAFRAL report is the observation that Monetary Policy Transmission (MPT) through NBFCs is robust. However, it's noteworthy that there is a delay of nearly two years to witness the full impact of monetary policy changes on their balance sheets. This intriguing delay has implications for both policymakers and the financial industry.

Empowering Financial Inclusion

Financial inclusion has been a priority for the Indian government, and NBFCs play a significant role in achieving this goal. They cater to the underserved and marginalized borrowers who often find it challenging to access traditional banking services. Over the last decade, retail lending by NBFCs has grown significantly, nearly doubling, thanks to their adept use of technology.

Digital Revolution in Lending

Digital lending has been a game-changer for the financial sector, and NBFCs have been at the forefront of this revolution. The report reveals that the share of digital lending in overall lending was a remarkable 60.53% for NBFCs in FY 2020, whereas traditional banks lagged far behind at just 5.53%. This demonstrates the agility and adaptability of NBFCs in embracing technology for the benefit of their customers.

The Growth Trajectory of NBFCs

Over the past few years, NBFCs in India have experienced significant growth. Their proliferation can be traced back to the aftermath of the global financial crisis. However, this journey has not been without its challenges. The report highlights that the NBFC sector faced disruptions in 2018-19, mainly due to the IL&FS default. Despite these shocks, the sector continues to evolve and expand.

Shifting Dynamics in Credit Share

A notable trend outlined in the CAFRAL report is the changing dynamics of credit share between NBFCs and traditional banks. The rapid growth of NBFCs has coincided with a decline in the share of bank credit. This shift in the financial landscape is a significant development that requires a closer look.

CAFRAL's Role in Advancing Financial Research

The Centre for Advanced Financial Research and Learning (CAFRAL) was established in 2006 as an independent body by the Reserve Bank of India (RBI). Its primary objective is to promote research in finance, macroeconomics, and public policy. CAFRAL's consistent efforts in producing insightful reports like the India Finance Report 2023 are crucial in shaping the financial ecosystem of the nation.


The CAFRAL India Finance Report 2023 is an invaluable resource for anyone interested in understanding the dynamic landscape of Non-Banking Financial Companies in India. It sheds light on the critical role played by NBFCs in driving financial inclusion, their pioneering efforts in digital lending, and the changing credit share dynamics in the Indian financial sector. This report not only provides a snapshot of the present but also offers valuable insights into the future of finance in India.


Q1: Where can I access the CAFRAL India Finance Report 2023?

You can access the CAFRAL India Finance Report 2023 by visiting the official CAFRAL website or through authorized channels.

Q2: What is the significance of the delayed Monetary Policy Transmission through NBFCs?

The delayed impact of Monetary Policy Transmission through NBFCs can have far-reaching implications for the economy, as it affects the timing and effectiveness of monetary policy decisions.

Q3: How do NBFCs contribute to financial inclusion?

NBFCs cater to the underserved and marginalized borrowers, thereby empowering them with access to financial services that were previously unavailable to them.

Q4: What is the primary reason behind the rapid growth of NBFCs in India?

The rapid growth of NBFCs can be attributed to their ability to leverage technology, making financial services more accessible and convenient.

Q5: What role does CAFRAL play in the financial research landscape of India?

CAFRAL, established by the RBI, is dedicated to advancing financial research, macroeconomics, and public policy, making it a crucial institution in shaping the financial future of India.

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