Investigating The Impact Of Economic Factors On The Performance Of Rbi-Registered Non-Banking Financial Companies In India

Abstract

This research paper aims to know how different economic variables influencing the performance of RBI-NBFCs in Indian context. With the changing phase of financial system in India NBFCs are thus more relevant to provide credit and spread financial access. However, their performance depends on several economic factors such as interest rate, inflation, Gross Domestic Product and monetary policy. In this research, quantitative method is adopted, and through the application of econometric models, data from a sample of RBI-registered NBFCs over the last decade were analyzed.

Research findings categorise that balance between NBFCs’ cost of fund and lending rate and inflationary pressures directly impact its profitability and liquidity to fund and hence advances to GDP growth ratio. In addition, the study establishes that there is a vulnerability of NBFC performance to the regulators’ adjustments of policies on the ground of RBI. The paper concludes with specific management strategies to help NBFCs to improve the organizations’ bad loans ratio and guard against future economic shocks whilst paving way for sustainable development. The research adds to the existing knowledge of NBFCs in India and informs policymakers and interested parties who seek to enhance the sector’s impact on the economy.