NBFCs are emerging as an alternative to mainstream banking. Besides, they are also emerging as an integral part of the Indian Financial System and have commendable contributions towards the Government's agenda of financial Inclusion. They have been providing credit to retail customers in the underserved and unbanked areas.

However, the NBFC sector is expected to clock loan growth of 7-8% in the current financial year (FY22). NBFC in the India sector is playing a critical role in the development of Core infrastructure, transport, employment generation, wealth creation, economic development of the weaker sections in India. On the other hand, gross non-performing assets of NBFCs are likely to rise, following the Reserve Bank of India's (RBI) move to tighten the NPA norms in November 2021.

NBFC have played a key role in the development of important sectors like Road Transport and Infrastructure which are the life lines of our economy. NBFCs have been supplementing the role of the organized banking sector by bridging the credit gaps.

The growth of NBFCs in India has scaled substantial progress and has diversified their activities up to a large extent. Various funding arrangements entered by non-banking financial companies are set to come under scrutiny of auditors with effect from FY22 audit.

Secondly, as per the Enforcement Directorate, A number of fintech companies and NBFCs 'backed by' Chinese funds have generated proceeds of crime worth more than Rs 940 crore by indulging in predatory lending activities and violating RBI guidelines while operating in India.

They are not covered under the financial and state financial regulation. The RBI announced a small-scale-based framework for NBFC with effect from Oct 22, 2022. The new framework comprises capital requirements, governance standards, prudence regulation, and other similar criteria. Experts predict that FY23 could be a year of normalcy in disbursement.