What is NBFC?

NBFCs full form is Non-Banking Financial Company and it refers to a company that has been registered under the Companies Act, 1956. These non-banking financial companies engaged in the business of loans and advances, acquisition of shares, stocks, bonds, debentures and securities.

“Nonbank financial companies (NBFCs), also known as nonbank financial institutions (NBFIs) are financial institutions that offer various banking services but do not have a banking license. Generally, these institutions are not allowed to take traditional demand deposits—readily available funds, such as those in checking or savings accounts—from the public.”- Investopedia

India's top 50 NBFCs Ranking 2020

Salient Features of NBFC companies

  • Non-banking financial companies are also known as non-banking financial institutions (NBFIs).
  • These are entities which provide bank-like financial services but do not hold a banking license.
  • Therefore, the NBFCs are not bound by the banking regulations and oversight to which the traditional banks have to adhere.
  • NBFCs are regulated by the Ministry of Corporate Affairs and the Reserve Bank of India.

Types of NBFC companies

  • Asset Finance Company
  • Investment Company
  • Micro Finance Company
  • Infrastructure Finance Company
  • Loan Company
  • Mortgage Guarantee Company
  • Core Investment Company
  • Housing Finance Company

NBFCs in India

Non-banking financial companies (NBFCs) play a pivotal role in the Indian financial system and have taken a great leap in the last 10 years. These financial entities have penetrated the remote areas of the country and offer credit facilities to those millions of individuals and small firms which generally are ignored by the banks.

Finance, that has rightly been termed as ‘lifeblood of business’ is scarce for many startups, small firms and individuals as they are not able to satisfy stringent conditions set by the banks. The NBFCs have come to the rescue of such entities and given them a lifeline.

As per a study conducted by the Microfinance Institutions Network (MFIN) the gross loan portfolio (GLP) has witnessed a growth of 47.85 per cent in the quarter ended September 30, 2019. The report highlights that compared to that of Rs 1.36 lakh crore in the same quarter in 2018 it has risen to Rs 2.01 lakh crore.

Out of this a loan amount outstanding of Rs 62,960 crore that amounts as the second-highest was provided by the NBFCs and Microfinance institutions, accounting for 31 per cent to the total industry portfolio.

The study by MFIN also states that the on-balance sheet portfolio of 85 NBFC-MFIs was Rs 62,960 crore as on September 30, 2019, and that it has witnessed a very impressive growth of 17 per cent over the last fiscal and now cover 601 districts of 35 states and union territories in India.

Top NBFCs in India

In view of the immense rise and success of the non-banking financial companies, the need to assess their ranking has arisen.

There are approximately 10,000 NBFCs registered in India with the Reserve Bank of India (RBI) out of which we have compiled a list of 50 top ranking NBFCs on two different parameters.

This “India’s Top 50 NBFCs Ranking in 2020” has been compiled in a manner to give helpful insight into this strong pillar of Indian economy. This ranking will help you to identify the best finance companies in India in this sector.

Ranking Methodology

We have ranked the top NBFC in India on three parameters: the first criteria is

1) Annual Turnover

2) Net Sales

3) Social Engagement & Reach

#1.  Top 50 NBFCs – Based on Annual Turnover

Coming out strongly as a driver of economic growth and an alternative to traditional banking, the NBFCs in India are transforming the Indian Financial horizon in a big way.

NBFC in India is the vehicle that is trying to fulfil the Central Government’s agenda of financial inclusion and is being recognized as a growth propeller. Catering to all kinds of needs of firms and individuals, in the remotest corners of the country, the NBFC companies have gained undisputed popularity and recognition.

Annual turnover has always been considered as the most popular parameter to assess the strength of any company in all industries, thus, we decided to rank the 50 NBFCs with the highest turnover.

But before we start let’s see what is annual turnover. Annual turnover of an entity refers to the total ordinary income that it has earned in a particular income year from the sale of goods or by providing services.

As it is mostly considered synonymous with sales and revenues of a business, thus, it is treated as an authentic parameter to judge the performance of any entity.

Top 50 NBFCs – Based on Annual Turnover
Company Name Net Profit

(Rs. Cr.)

Rank
Bajaj Finance Limited 3,890.34 1
Shriram Transport Finance Company Limited 2,563.99 2
Muthoot Finance Limited 1,972.14 3
Mahindra & Mahindra Financial Services Limited 1,557.06 4
Sundaram Finance Limited 1,126.31 5
Shriram City Union Finance Limited 988.88 6
Manappuram Finance Limited 790.46 7
Bajaj Holdings Limited 788.19 8
Magma Fincorp Limited 275.13 9
L&T Finance Holdings Limited 267.06 10
Indostar Capital Finance Limited 255.13 11
Motilal Oswal Financial Services Limited 196.80 12
PTC India Financial Services Limited 184.14 13
Reliance Capital Limited 157.00 14
Tata Investment Corporation Limited 147.65 15
IDFC Limited 127.89 16
Edelweiss Financial Services 102.88 17
SREI Infrastructure Finance Limited 94.67 18
Muthoot Capital Services Limited 82.42 19
Balmer Lawrie Investment Limited 75.91 20
Paisano Digital Limited 56.77 21
PNB Gilts Limited 52.86 22
Gloster Limited 44.15 23
Bengal and Assam Company Limited 38.79 24
Vardhman Holdings Limited 30.25 25
Williamson Magor and Company Limited 27.89 26
CSL Finance Limited 25.15 27
SIL Investments Limited 19.74 28
Summit Securities Limited 12.72 29
Industrial and Prudential Investment Company Limited 9.47 30
Equitas Holdings Limited 9.33 31
U. Y. Fincorp Limited 8.14 32
Baid Leasing and Finance Company Limited 7.85 33
Ashika Credit Capital Limited 7.56 34
Shalibhadra Finance Limited 6.40 35
Arman Financial Services Limited 6.38 36
TCI Finance Limited 4.27 37
Mansi Finance (Chennai) Limited 4.23 38
TCFC Finance Limited 3.86 39
Cox & Kings Financial Service Limited 3.34 40
McDowell Holdings Limited 3.01 41
Mercantile Ventures Limited 2.83 42
NPR Finance Limited 2.62 43
Ganon Products Limited 2.54 44
United Credit Financial Services Limited 2.22 45
Master Trust Limited 1.86 46
Ugro Capital Limited 1.46 47
Capital Trade Links Limited 1.29 48
Nalin Lease Finance Limited 1.27 49
Nalin Lease Finance Limited 1.08 50

Source: Money Control

#2. Top 50 NBFCs – Based on Net Profit

The other best criteria for ranking the NBFC companies in India is to refer to the net profit of the companies as it validates the potential strength of any entity. Turnover may work as a good indicator of a company’s overall performance but net profit helps us in assessing the management’s efficiency.

“The difference between revenue and total business expenses is known as net profit. Net profit is the last line in an income statement and is the figure that concerns most people who use such statement.”- Small Business

By running through the net profit index of non-banking financial companies different stakeholders are able to draw deep insight into the health of an NBFC.

Owners:

For single proprietors, it is the most convenient way to take stock of the finances of their company regularly.

In partnerships, by accessing the net profit the owners get an idea of how the earnings can be distributed among themselves.

For Corporations and registered companies, the net profit decides how much is to be paid to their stockholders.

Investors

For investors of finance companies in India, profitability history becomes a major parameter to assess the risks of investing in any company. Accountants and financial analysts consider net profit as major investment criteria before acquiring shares of stocks.

Creditors

In obtaining a business loan net profit plays a very critical role.

Creditors assess a prospective debtor’s capacity to pay future debts based on their net profit and hence, it is viewed as a major determining criterion in all sectors, including NBFC companies.

Competitors

Net profit is an effective tool that is used as a gauge to measure the operational efficiency and profitability of an entity in comparison to other peer businesses.

NBFCs in India compare their net profit margin with the others and assess if their competitors have performed better or worse in a given time period.

Government

Net profit holds a great significance for the government too as it serves as the basis for computing business income taxes collected by the Internal Revenue Service.

Thus, we are here giving an exhaustive list of 50 top ranking non-banking finance companies in India with the highest net profit.

Top 50 NBFCs – Based on Net Profit
Company Name Net Profit

(Rs. Cr.)

Rank
Bajaj Finance Limited 3,890.34 1
Shriram Transport Finance Company Limited 2,563.99 2
Muthoot Finance Limited 1,972.14 3
M&M Financial Limited 1,557.06 4
Sundaram Finance Limited 1,126.31 5
Shriram City Union Finance Limited 988.88 6
Manappuram Finance Limited 790.46 7
Bajaj Holdings Limited 788.19 8
Magma Fincorp Limited 275.13 9
L&T Finance Limited 267.06 10
Indostar Capital Finance Limited 255.13 11
Motilal Oswal Financial Services Limited 196.80 12
PTC India Finance Limited 184.14 13
Reliance Capital Limited 157.00 14
Tata Investment Corporation Limited 147.65 15
IDFC Limited Financial Services Limited 127.89 16
Edelweiss  Finance Limited 102.88 17
SREI Infrastructure Finance Limited 94.67 18
Muthoot Capital Services Limited 82.42 19
Balmer Lawrie Investment Limited 75.91 20
Paisalo Digital Limited 56.77 21
PNB Gilts Limited 52.86 22
Gloster Limited 44.15 23
Bengal & Assam Company Limited 38.79 24
Vardhman Holdings Limited 30.25 25
Williamson Magor and Company Limited 27.89 26
CSL Finance Limited 25.15 27
SIL Investments Limited 19.74 28
BNK Capital Markets Limited 13.58 29
Summit Securities Limited 12.72 30
Sakthi Finance Limited 11.96 31
Industrial and Prudential Investment Company 9.47 32
Equitas Holding Limited 9.33 33
Coral India Finance & Housing Limited 8.22 34
U. Y. Fincorp Limited 8.14 35
Baid Leasing & Finance Company Limited 7.85 36
Ashika Credit Capital Limited 7.56 37
Shalibhadra Finance Limited 6.40 38
Arman Financial Services Limited 6.38 39
Ceejay Finance Limited 5.09 40
TCI Finance Limited 4.27 41
Mansi Finance (Chennai) Limited 4.23 42
TCFC Finance Limited 3.86 43
Cox & Kings Financial Service Limited 3.34 44
McDowell Holdings Limited 3.01 45
Mercantile Ventures Limited 2.83 46
NPR Finance Limited 2.62 47
Ganon Products Limited 2.54 48
United Credit Financial Services Limited 2.22 49
Master Trust Limited 1.86 50

Source: Money Control

#3. Top 50 NBFCs Based on Social Engagement and Reach

This is a very out of common parameter that we thought of adding here as this will bring out the modern-looking approach applied by the different NBFCs in India.

In these modern times people, organizations and companies are all connected and updated on varied social media platforms like Facebook, Twitter, LinkedIn, Instagram and others.

Internet’s penetration in the technological ecosystem has brought about a great shift in how businesses and companies fare, and non-banking financial companies have not remained immune to it.

Technological disruptions are now being willingly embraced by NBFCs in India to stay relevant in this digital era. Thus, all forward-looking NBFCs have heavily invested in them and reap its benefit by relying on the insights provided through them.

For example, to assess an applicant’s loan eligibility the NBFCs depend on the digitally fetched data.

Apart from this, digital technologies and interfaces help the best finance companies in India to build relevant and superior customer experiences

By taking assistance of varied tools and technological advancements, the NBFCs in India are now able to decode their customers’ needs and demands in a highly focused manner.

The biggest advantage the NBFCs draw from social media reach and engagement is they can create targeted marketing strategies as they simultaneously create brand awareness.

With the young generation being well connected on social media platforms it is imperative today for non-banking financial companies to explore this non-conventional & non-traditional channel to the maximum.

By doing so the non-banking financial companies will enjoy the distinction of being a leader in its way as it will utilize the social media tool to not only inform and engage but also successfully convert customers instantly.

All forward-looking non-banking financial companies, irrespective of their size, agree that engaging with social media is a winning marketing tool as more and more youngsters spend a lot of time on them.

In this ranking methodology, no tangible data has been floated and thus, it is a perception-based ranking but this criterion adds a third dimension to our study about non-banking financial companies.

By going through this extensive list of top NBFCs in India one can easily gauge how well they socially engage with their customers.

These are the 3 main benefits that non-banking financial companies draw from being connected to various social platforms.

Benefit #1. Pique Curiosity & Spread Awareness: The Internet and smartphones have made social sites accessible to almost all tech-savvy millennials that spend a great number of hours on these sites.

NBFCs have grabbed this opportunity to keep their target audience updated by sharing relevant information and by doing so these non-banking financial companies in India are able to bridge the knowledge gaps too.

Online presence of top NBFCs thus has come out to be the cheapest and best tool to strengthen connectivity.

Benefit #2. Strengthen Connectivity: Non-banking financial companies are enhancing social engagement with customers on various social media channels that helps in strengthening connectivity with them.

Benefit #3. Reach Out to Communities:

Reaching out to the remotest locations of the country, the social media sites help the NBFCs in India build up a strong ‘followers’ community and this makes it easier for them to showcase their innovations.

The best finance companies in India promote their products and services across social media and this has turned out a great medium to reach out to potential customers.

Top 50 NBFCs Based on Social Engagement and Reach
NBFCs List Rank
Capital First Limited 1
India Infoline Finance Limited 2
L&T Finance Limited 3
Motilal Oswal Financial Services Limited 4
HDB Financial Services Limited 5
Reliance Capital Limited 6
Tata Capital Financial Services Limited 7
Fullerton India Credit Company Limited 8
Religare Enterprises Limited 9
Magma Fincorp Limited 10
Muthoot Fincorp Limited 11
L&T Infrastructure Finance Company Limited 12
Shriram Transport Finance Company Limited 13
Mahindra & Mahindra Financial Services Limited 14
Vistaar Financial Services Private Limited 15
SREI Infrastructure Finance Limited 16
JM Financial Limited 17
JM Financial Credit Solutions Limited 18
Tata Motors Finance Limited 19
Cholamandalam Investment and Finance Company Limited 20
Hinduja Leyland Finance Limited 21
IL&FS Financial Services Limited 22
Satin Creditcare Network Limited 23
Balmer Lawrie Investments Limited 24
Manappuram Finance Limited 25
Muthoot Finance Limited 26
Shriram City Union Finance Limited 27
Religare Finvest Limited 28
Rural Electrification Corporation Limited 29
IndoStar Capital Finance Limited 30
Nabard Financial Services Limited 31
Power Finance Corporation Limited 32
Ujjivan Financial Services Limited 33
LKP Finance Limited 34
Aditya Birla Finance Limited 35
Bajaj Finance Limited 36
Indian Renewable Energy Development Agency Limited 37
Intec Capital Limited 38
IFCI Limited 39
India Infrastructure Finance Company Limited 40
Sundaram Finance Limited 41
Family Credit Limited 42
Sakthi Finance Limited 43
Axis Finance Limited 44
Muthoot Capital Services Limited 45
Indian Railway Finance Corporation Limited 46
The National Small Industries Corporation Limited 47
SICOM Limited 48
STCI Primary Dealer Limited 49
PNB Gilts Limited 50

Source: The Banking Finance

There are no two ways about the importance of NBFCs in the Indian economy and their contribution to society at large. Whereas the banks cater to the wealthy, well-to-do individuals and companies, the non-banking financial companies help in changing the dreams of not so well off firms and individuals into reality.

NBFCs have taken a lead over the banks in providing innovative financial services to Micro, Small, and Medium Enterprises (MSMEs) as they offer the most suitable package to them, based on their business requirements.

In recent years, the NBFCs in India have been instrumental in the infrastructural development of the country leading to inclusive economic growth.

The NBFCs are getting more and more recognition for wealth creation, employment generation and bank credit especially in the rural areas and to the financially weaker sections of the society. Hailed as a game-changer the NBFC sector has been witnessing a stable growth in the last decade, beating the slowdown in the economy.

Conclusion

The above-mentioned ranking of NBFCs shows that although the top non-banking financial companies are performing well in India others are lagging. These companies need to cross-examine their performance on various parameters of the sector and work to eradicate the anomalies.

Looking at the financial needs of the Indians there is a wide scope for NBFCs in every relevant sector and those companies which have a futuristic approach will reap the benefit. Targeting rural and backward areas the NBFCs have the privilege to offer small-ticket loans to the deprived but deserving sections.

NBFCs have emerged as a large employment generator by lending their support to small scale businesses and companies. To retain their growth and momentum the non-banking financial companies need to keep upgrading themselves.

Taking a cue from the performance of all various parameters the NBFC companies can strive to improve their working and management and try to improve their ranking. Those which are left behind can mark the areas in which they lag and take a strategic approach to march forward.

The Coronavirus pandemic has brought an upheaval in the entire economy of India and NBFCs are also impacted by it but the RBI is taking proactive steps to ease out the hurdles like the one-time restructuring of all loans etc.

Taking this as a passing phase the NBFCs must get ready and anticipate the future market based on the post-COVID-19 scenario and work towards how to grab the opportunities that will be thrown open for them. The immaculate planning and execution of future strategies will be the best way forward for all non-banking financial companies.

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