The Indian NBFC sector is currently the third largest in the world, after the US and UK

NEW DELHI: India’s non-bank financial sector has become the third largest in the world after the US and UK, according to a report by SBI, which highlights the growing strength of the country’s financial sector.

Non-bank financial institutions do not have a full banking license and therefore cannot accept public deposits. These entities focus on lending to consumers and businesses that play a key role in driving economic growth.

The report shows that over the last decade, the Indian banking system has demonstrated remarkable resilience, overcoming numerous challenges posed by both the domestic and international economic environments.

It said improving asset quality and strong macroeconomic fundamentals played a key role in improving the Indian banking sector.

It emphasized that the Government of India and regulators were focused on creating a level playing field for financial institutions. This included initiatives such as creating strong banks through mergers and capital infusions, improving management practices, increasing the reach and quality of financial services, and increasing the use of digital banking.

During the pandemic, the government maintained the stability of the financial sector through significant capital and liquidity buffers. This resilience is attributed to the proactive steps taken by the Reserve Bank of India (RBI).

The report also pointed out that the RBI’s efforts to strengthen the financial system included enforcing regulatory measures to ensure the sector was well protected from economic shocks. These measures have not only helped maintain stability, but also supported growth and innovation in the sector.

Recently, the Indian digital banking landscape has also seen significant progress. The emphasis on digital banking has contributed significantly to the sector’s growth. The shift to digital platforms has increased access to financial services, making them more inclusive and efficient.

The report also highlighted that the government and regulators have prioritized customer protection, ensuring that society’s interests are protected in the face of digital transformation.