The Non Banking Finance Companies sector with over 11,000 players of all shapes and sizes is showing reduced numbers. This is good news. In the first half of the current year, there were some 368 cancellations, while in 2016/17 there were 169 offset by 105 new registrations.
The RBI says the cancellations are mainly voluntary surrender, and non-compliance of the revised criteria for net owned funds. After the Payments, and Small Finance banks (mostly MFIs), there are many NBFC players not renewing licences, and there are fintechs with NBFC licences where entry and exit are rapid.
The NBFC as a sector is just 14 per cent of the banking industry's total assets and its share in loan and advances is about 18 per cent. Clearly, the industry needs fewer but not smaller players.