Non-banking financial companies (NBFCs) are financial institutions that offer various banking services but do not hold a banking license.
NBFCs play a crucial role in India's credit ecosystem. NBFCs along with the banks work with a single objective of expanding the credit base of the country while being profitable.
In India, NBFCs have become important constituents of the finance sector. Over the last decade, they have experienced phenomenal growth. As a result, they have surpassed the traditional banks in terms of credit growth.
NBFCs are covered under the banking regulations laid down by the Reserve Bank of India and provide banking services like loans, credit facilities, retirement planning, investing, and stocking in the money market.
Investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, and private equity funds are all examples of NBFCs.
The growth of the financial sector can be attributed to rise in financial inclusion, increasing penetration of financial assets, wider participation in equity markets, and technology adoption.
Given bright growth prospects, it's worth looking at the top Indian NBFCs from an investing perspective.
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