Overview of NBFC Collaboration

NBFC Collaboration is a sort of association where NBFC License holders partner with the Fintech companies and banks intending to raise funds and enhance financial inclusion in the country. In simple words, collaboration means joining hands for a common set of objectives. In India, there are more than 9000 active licensed NBFCs. Talking about the book size of more than 40 crores, only 954 NBFCs fits into this category. Remaining NBFCs are entitled to meet the regulatory cap of INR 20 million. These remaining NBFCs are just holding a certificate.

The term NBFC Collaboration is a newly introduced concept to enhance economic growth. Fintech companies, along with NBFC license holders, will fund the NBFC for an acceptable fee amount, as a consideration, they will be using the NBFC License. Both the parties decide the consideration and share revenue with each other. The success of NBFC Collaboration depends upon the combination of innovative loan products and the most advanced technology, making the process of loan disbursement easy and quick.

In the year 2019, due to strict governance norms of Reserve Bank of India, the NBFCs operating on a massive scale suffered from the economic crisis. However, Medium-scale and Small-scale NBFC faced a difficult time, they have been progressing, and they are readily raising a handsome amount of FDI for retail lending. It's not wrong to say that they are becoming commercially successful. The collaboration of large scale NBFCs with Fintech entities and banks are bringing the palmy days for the companies involved in all these processes. Furthermore, the NBFC collaboration will help in finding new ways to acquire clients and fulfilling the primary objective i.e., raising funds.