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Major non-banking finance companies (NBFCs), such as Bajaj Finance and Shriram Finance, offer about 150 basis points more than banks making them attractive choices for savers. Entities such as Indiabulls Housing or Nido Home Finance (previously, Edelweiss Housing Finance), offer even higher rates.
Fixed deposit rates of five large banks for a year remained between 6% and 7.25%.
According to RBI’s Handbook of Statistics on Indian Economy, aggregate public deposits of NBFCs stood at Rs 1.03 lakh crore at the end of March, registering a 20.8% year-on-year jump. In fact, the NBFCs have booked 20.8% growth for the past two consecutive years in FY23 and FY24, data showed.
In contrast, banks witnessed deposits growth of 9.6% in FY23.
Bajaj Finance reported a 35% year-on-year deposit growth in FY24 to Rs 60151 crore with this contributing a fifth of the company’s consolidated borrowing. Shriram Finance meanwhile showed 23% year-on-year rise to Rs 44444 crore. The central bank however downsized the number of deposit-taking NBFCs to 25 in FY24 from 34 in the preceding year as the regulator is not comfortable with NBFCs accepting public deposits since the regulations they follow are not as stringent as in case of banks. The number was reduced from 240 a decade back.
Top central bankers believe that the regulations, even for the upper layer of NBFCs, although more calibrated, are not on par with that of banks.
NBFCs, with minimum investment grade rating of “BBB-“, are allowed to raise public deposits for a minimum tenure of 12 months and a maximum period of 60 months. They cannot offer current account or savings account facilities, which are typically called demand deposits.
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https://economictimes.indiatimes.com/markets/stocks/news/nbfcs-witness-higher-deposit-growth-than-banks-records-21-rise-in-fy24/articleshow/113439804.cms
