Year gone by
The Financial Year 2016-17 has been one of healthy growth. There has also been a growth in bad loans during 2016. Adequate provisions for bad loans at the cost of posting huge losses oversaw the first half of the financial year. Former governor Raghuram Rajan’s decision to not seek another term in office in September, Donald Trump winning the US presidency and Brexit were incidents from the just concluded Financial year that sort of shook the financial market in India. Demonetization came along replacing the old Rs. 500 and Rs. 1000 currency notes.
What does 2017-18 have in store?
The government’s relentless push for cashless economy could see every individual switch to digital modes for monetary transactions. Digital modes of transactions are slowly but surely replacing obsolete modes like money order and demand draft.
Change in NBFCs business model
Due to the restraint on cash, NBFCs will have to look into their business model structure because unlike the last couple of years most of their customers were not in the income tax bracket and earned salaries and wages in cash. Now due to the shortage of cash NBFCs will have to re arrange their risk assessment process to accommodate non Loan Against Property (LAP) customers who mostly transacted in cash before demonetization hit. Introducing newer digital products would be their priority now.
The entry of 10 small finance banks and 8 payments bank during the beginning of this year has changed the banking landscape. This will easily intensify the competition with newer products being offered by each institution. Rates are expected to go higher for lenders and drop low for borrowers.
Source: For more details check out Livemint