In the present scenario loans extended by the NBFCs to MSMEs grew rapidly and the experience of banks and NBFC in terms of quality asset explains the difference in the credit growth.
What is NBFC
NBFC is basically Non Banking financial institutions which is registered under the Companies Act, 2013 with principle objective of dealing in financial activities. Companies Financial asset shall constitute of more than 50% of the total asset and income, and Income for Financial statement constitutes more than 50% of gross income.
What is MSME
MSME stands for Micro and Small and Medium Enterprise. It has many benefits as it is given higher preference in terms of Government License and Certification. MSME also avails benefits in bank loans as compared to the interest paid on regular basis.
Role of NBFC P2P in India’s Economic Development
It helps in the supply of credit in the economic growth of economy, and it helps youth as it helps in achieving of cheaper and faster credit. The new entrants entrepreneur with the ability to repay the loan, are provided with the facility of dedicated loan products from various online platform.
In the current scenario as we can see that man and women are equal, therefore its purpose is to be to empower more and more women as it not only increases the economic development and prosperity but also a good indicator in the development of the entire household.
NBFC P2P helps in connecting and lenders with the borrowers by using the digital platform. For faster decision making and implementation, NBFC P2P has cut through end number of process which ensures interest of both lender and borrower. 24 hours banking facility is available for borrower.
Why NBFC P2P a better choice for raising funds for an MSME these days?
NBFC environment has now been changed as it provides larger opportunity for income seeking investor to diversify their portfolio which was earlier available to the Banks. Potential and e investor dealing in MSME sector are considering P2P platforms for various reasons-
- Returns which are provided are highly competitive when considered against average returns delivered by other market linked investment like MFs and stock market.
- In this process, both lender and borrower can choose their specified period of time between 6 to 36 months.
- It provides diversification that can easily be attained by borrowers profile.
- Availing more options for small business where in starting money is required for the temporary shortfall or to meet out the revenue expenses.
- It bridges the gap of risk factor involved in funding the small business, as small business srae dependent of cash transactions.
Conclusion
NBFC P2P player has becoming more popular in MSME and in small business financing. It lends fund to the business of MSME by better choice to avail funds. NBFC manly focuses on young entrepreneur with potential and business ideas. It also empowers women entrepreneurs which also helps in increasing and improving economic growth of the country. Therefore, it can e said that P2P is the better choice for availing funds to meet out the revenue expenses and working capital requirement.