NBFCs are present in the competing fields of vehicle financing, hire purchase, lease, personal loans, working capital loans, consumer loans, housing loans, loans against Shares, investments, distribution of financial products, etc. NBFCs are present where the risks are higher than returns, recovery has to be the focus area, loan-ticket size is small, appraisal and disbursement has to be speedy and flexibility in terms of loan size and tenor is required.
In recent years, NBFCs are witnessing strong competition in their traditional areas of retail lending from banks and Financial Institutions. Banks, which have innate advantage of lower cost of funds, are taking an increasing Share in retail financing and providing strong competition to NBFCs. The RBI also intends towards moving to a phase of non-acceptance of Public Deposits by NBFCs over the years.