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136 Economic Survey 2021-22

Figure 17: Sectoral distribution of NBFC Credit

Sep-21 40.0 28.6 12.3 17.7 1.4

2021 39.3 29.1 12.2 17.9 1.4

2020 39.3 28.6 14.5 15.7 2.0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Industry Retail Loans Services Other Non-food credit Agriculture and allied activities

Source: Supervisory Returns, RBI.
Note: Number for 2020 and 2021 indicate end- March figures. Numbers for September 2021
are survey calculations from the Report on Trend and Progress of Banking in India 2020-21
4.33 Total assets of NBFCs increased from `36.37 lakh crore in September 2020 to `42.05 lakh
crore in September 2021, resulting in YoY growth of 15.61 per cent. Banks’ exposure to NBFCs
increased (in the form of bank lending and investment in Non-Convertible Debenture (NCDs)
and Commercial Paper (CPs)) from `8.44 lakh crore in September 2020 to `9.16 lakh crore in
September 2021, recording YoY growth of 8.5 per cent.

4.34 The external liabilities of NBFCs in the form of secured and unsecured borrowings and
public deposits increased by 7.95 per cent (on a YoY basis) in September 2021. While borrowings
from other financial institutions marginally increased from `58,650 crore in March 2021 to
`59,525 crore in September 2021 (4.34 per cent YoY growth), market borrowings - NCDs and
CPs - increased from `10.56 lakh crore in September 2020 to `11.41 lakh crore in September
2021 (8.09 per cent YoY growth).

4.35 GNPA ratio of NBFCs was higher at 6.55 per cent at end-September 2021, as compared
to 6.06 per cent at end-March 2021. However, their net NPA ratio remained at 2.93 per cent at
end-September 2021 same as in March 2021. As against the regulatory requirement of 15 per
cent, CRAR for the NBFC sector stood at 26.64 per cent at end-September 2021.

Box 4: FACTORING IN INDIA

Factoring is an important source of liquidity worldwide, especially for MSMEs. Factoring is a
transaction where an entity sells its receivables (dues from a customer) to a third party (a ‘factor’ like
a bank or NBFC) for immediate funds. All or part of invoice can be sold to a factor for getting money
immediately at competitive interest rate. The factor then collects payments from the buyer of goods
and earns a commission in the form of some interest. This is different from bill discounting. In bill
discounting, a bank or NBFC gives a certain percentage of the total outstanding value of invoices to
seller and in most cases the seller has to take on the responsibility for payment of invoices by the buyer
to the factor. However, in case of factoring, the factor takes on the responsibility for the collection
of invoices. There are different types of factoring: ‘with recourse’ factoring where seller has to