The NBFC sector (Non-Banking Financial Company) is intermediary which is engaged in the

business of finances. It accepts deposits, delivers credit and plays an important role in directing
the scarce financial resources towards the creation of wealth.

Hence, they supplement the organized banking sector through meeting the increasing financial
requirements of the corporate sector and deliver credit to the unorganized sector as well as small
local borrowers. Though they can not finance activities related to agriculture, industry, sale,
purchase etc., they focus on activities related to loans and advances, acquisition of stock, shares,
bonds, etc., issued by government.

These organizations work with the sole aim of making the financial services easily available and
accessible for one and all.

Through the case mentioned of HDFC, we can see how the NBFCs have benefitted by the exit of
HDFC. Since HDFC was one of the top five players, its exit has led to increase in access to debt
markets at favorable pricing for NBFCs. They also have an opportunity to grow in the banking
sector without risking the regulatory breach.

The NBFCs can also improve their focus towards raising retail deposits. These deposits
increased up to 13 percent as a proportion of total borrowings in the third quarter of the financial
year 2022. This percentage is even higher for some NBFCs.

In the financial year 2022, the top five players recorded about 22 percent of the total non-bank
borrowings by NBFCs. This shows the preference of lenders for large players. Hence, the capital
market is easy to access

Hence, the Indian NBFC sector is supplementary to the mainstream banking sector.