An Overview of NBFC Software
NBFCs or Non-Banking Financial Institutions/Companies play a leading role in extending financial services and in promoting global economic growth by addressing diverse financial needs. These needs could include catering to the financial requirements of small and medium-sized enterprises (SMEs), enhancing job creation, lending in the local sector, and financial support to the weaker sectors of society.
For insurance-related matters, clients are also provided with emergency services such as financial support and guidance. NBFCs also deal in deposit processing activities that play a significant role in providing credit. NBFCs are not related to agricultural or industrial activities or the sale, purchase, or construction of real estate.
In India, the NBFC culture is growing rapidly and it adheres to the rules and regulations of the Indian banking sector. NBFCs don’t need a banking license and play a crucial role in various lines of credit, P2P lending, insurance, and stock acquisition.
NBFCs too need to apply the latest technologies and software, to do their jobs well. Manual work protocols can be ineffective and less impactful, whereas using the software for NBFC can enhance effectiveness, increase productivity, reduce overheads, overcome operational obstacles, respond to loan requests better, augment customer experience, reduce fraud, and reap other benefits. NBFC accounting software price varies from vendor to vendor, but you must choose the best one that suits your organizational needs.
Some Facts about NBFCs:
Statistically, it has been observed that digital lending in NBFCs has surpassed the digital lending scenario in banks in India. According to a report, as of March 31, 2020, it is observed that digital lending as compared to physical lending in banks was only INR 1.12 lakh crore as compared to INR 53.08 lakh crore via physical mode. On the other hand, in NBFCs, the rate of digital lending was INR 0.23 lakh crore as compared to INR 1.93 lakh crore via physical mode.
This wasn’t always the case, as in 2017, the difference between digital lending between NBFCs (0.55%) and banks (0.31%) wasn’t too huge. Since 2017, NBFCs have aced the financial lending practices through the digital mode.
Reports say that the volume of digital financial lending has grown 12-fold from INR 11,671 cr to INR 1,41,821 cr from 2017 to 2020. The dominant players in this were private banks(55%) and NBFCs(30%) in this digital lending system. Thus we can say, that NBFCs are moving fast towards the digitalization of processes and need apt support and technologies to take their processes further.
What is an NBFC?
NBFC is short for Non-Banking Financial Company and is a financial institution that offers various banking and financial services without a banking license. These are also known as NBFIs, non-banking financial institutions that are registered under the Companies Act of 1956 or 2013.
On January 31, 2021, there were 9,507 NBFCs registered with the RBI - Reserve Bank of India with assets above Rs 5 billion. About 300 companies in this category manage over 80% of NBFC's total assets.
As of March 31, 2021, the activities of the NBFC segment (including HFCs) exceeded 5.4 billion rupees, which represents approximately 25% of the banking sector's assets.
It has been forecasted that the Assets Under Management (AUM) of NBFCs will increase in the coming years because of the improving economic activity. This compares with an estimated 6-8% growth this year and 2% growth last year.
Why do NBFCs need software - NBFC software features?
Here are some important NBFC software features that can change the way it processes its functions, and lead to minimal costs and maximum gains:
- The best software for NBFCs is a customer-centric approach that helps NBFCs to function smoothly and is easy to use, robust and accurate.
- The software should be simple and safe that can help NBFCs and their customers to calculate late fees/fines, provide information on unpaid installments, track insurance, and generate a text file for loan payments based on the bank format.
- Non-banking financial software helps organizations to generate a high return on investment compared to other programs. For NBFCs, their data is their asset which should be stored securely. A genuine software will be a complete online system that facilitates adaptation to future program changes and helps organize necessary documents.
- You can monitor the activities of your marketing team, reduce total order processing time and even integrate SMS and e-mail systems in real-time with all types of MLM subscriptions.
- The best software for NBFC will be customizable according to customer needs, with a multi-user system for greater security and transparency tested on millions of records.
- You can also generate a customizable MIS report and transactions can be executed very easily and quickly.
- The optimization breaks the manual quotes and saves the user time in determining how many days to spend. New NBFC accounting software helps you estimate, track and trace customer locations for real-time updates on borrowers' repayments. It also reduces the load on the field collector and decreases the payload.
- Personalized Loan options along with custom algorithms for artificial intelligence allow you to find a specific solution based on the needs of your customers.
- The key to customer support is that you must resolve all your questions within a specified time. Banks are not known for providing instant credit services to their customers. Therefore, the credit services that are provided quickly in the face of technical support remove the obstacles. The new software reminds you of timely installment payments, personal messages to customers, and sharing loan invoices and installment statements.
- The software helps in diligent regulation of credit processing. You can apply for an NBFC software demo to ensure the right technology will help you recognize and get the right market share. It will help you rank potential users and increase your reach. Using data and analytics helps exemplary NBFC software navigate unstructured sectors within populations. The right NBFC program will provide the client with an appropriate usage plan for the client's current needs and informed financing decisions.
Benefits of an exemplary NBFC software
1. Transparency, safety, and security
This remains a priority for NBFCs and the software helps to maintain it using a high level of encryption, providing unparalleled protection and allowing the administrator to define data accessibility creating operational transparency.
Non-banking financial software can be customized according to the user's needs. In addition, the software allows new NBFC software features to be added to the system as the NBFC software company expands its service portfolio. Exposure to custom mobile applications also helps customers use the services with minimal hassle.
3. Robust system
NBFC software helps organizations to manage complex databases and convert the data into MS Office files for future reference.
4. Easily accessible
NBFCs software is easily accessible to customers, helps ensure fast delivery times, and enhances customer satisfaction. It also promptly informs customers of the payment due by e-mail and SMS. The multi-user system of this software provides quick access to customers and ensures transparency within the operation of NBFC.
You can reduce the paperwork, and indulge in faster loan and penalty processing.
The overheads associated with the customer's KYC can be reduced and the verification process can enhance the overall efficiency.
7. Systematized NBFC loan management software
Combined company data on cloud storage, helps in eliminating potential errors responsible for loan processing delays. The software helps professionals to tailor loan services to customer needs. It also provides an accurate loan amount and automatically generates receipts for repayments.
8. Track the defaulters
The software constantly tracks defaulters responsible for late or non-payment. The software allows companies to check customer data more efficiently and track defaults.
Other loan-related NBFC software features that the software can help you with are:
- Application for eligibility for an online loan and EMI calculation
- Credit analysis and document management
- End-to-end payment and approval management
- Automated EMI collection
Failure to use the appropriate software can put NBFCs in a stressful situation. Organizations need to follow market trends and provide uninterrupted services to their customers. Automation alerts them of possible delays and enables them to provide quality services to customers.
The NBFC software price in India can vary, so you must go through various features and budget requirements before you choose the best software. Implementing NBFC software can provide a win-win situation for all private lenders in this country.
In addition to simplifying the workflow, this software is very effective in managing a diversified portfolio of financial products. It also provides data-driven information to the practitioner to detect the pain areas within the system.
Q.1. Why is an NBFC better than a bank?
NBFCs are more flexible as compared to banks when it comes to loan verification, approval, and disbursement. NBFCs have a transparent system and while banks take a few days-weeks to process a loan, NBFCs can do the same within 24 hours. Here are some advantages of NBFCs as compared to banks:
- NBFCs puts customers first and follow a flexible selection criteria
- They follow a digital and hassle-free loan process
- This functionality ends up reducing interest rates and other charges like payment fees
Q.2. What is NBFC Software?
Non-banking financial software is a comprehensive, customizable, and state-of-the-art solution for managing the entire credit lifecycle. It automates business processes and improves operational efficiency.
NBFC Loan management software for NBFCs helps in reducing manual work to strengthen its workflow. The omnichannel loan management solution for NBFCs enables consumers to review their loan applications on online channels, providing a seamless customer experience.
NBFC's software is fully web-based and can be customized according to customer requirements. It offers various other functions like defining the loan product, managing and documenting records, calculating the loan amount, invoicing, processing the loan account, seizure and termination.
Q.3. How does NBFC work in India?
NBFC focuses on loans, equity investments, stocks, corporate bonds, fixed income securities, government or local government securities or other negotiable securities, insurance transactions, and businesses.
NBFC supports economic development by mobilizing resources, and capital formation and providing long-term credit and professional credit. NBFCs support job creation and the development of financial markets. This sector helps attract foreign subsidies and break the circle of poverty by acting as an instrument of governance.
Q.4. What are the advantages of NBFC software?
The best software for NBFC is:
- Easy to use, versatile, and simplifies the management system
- It guarantees the highest level of safety and provides an accurate quote for late fees/fines
- It communicates database information on unpaid repayments and automates the NBFC loan management software
- You can indulge in real-time monitoring of commonly used services, including customer inquiries and insurance
- It can help you create a text file to make the loan according to the bank formula
Q.5. Which is the software used by NBFC?
NBFCs use cloud-based software specifically designed to accelerate the entire NBFC loan management software life cycle by providing a fast loan processing experience. It is comprehensive and integrated, allowing NBFCs to identify and improve operational risks, mitigate manual processing to improve workflows, reduce inconsistencies and improve operational proficiency. The best software for NBFC is highly scalable, affordable, more flexible, and easier to deploy.
Q.6. What are NBFC and Fintech?
Fintech entities appear to be advantageous for ease of use and speed of service. NBFCs, on the other hand, have a greater advantage in the field of financial products.
When a person needs a loan of INR 2 lakh on more, it is better to trust an NBFC in this case. On the other hand, if a person works for a small business, corporation, or start-up, or is currently moving between many jobs or cities, applying for a loan from a Fintech company is better. FinTech loans are recommended if you are looking for a lower amount loan or quick personal loans.
NBFCs are more beneficial for specific capital needs, and FinTech financial services are for a person who has no problems with their previous loan or credit card as they will systematically search a person's profile rather than a credit score.
Q.7. What does NBFC stand for?
NBFC stands for a Non-Banking Financial Company which is registered under the Companies Act, 1956.
Q.8. What is NBFC in methodology?
NBFCs consider the credit risk and make a profit, taking into account the expected level of credit costs which exclusively depend on the asset class.
Q.9. What are the types of loans provided by NBFC?
- Personal Loan
- Vehicle Loan
- Property Loan
- Gold Loan
- Loan Against Deposits
- Education Loan
- Business Loan
- Micro Finance Loan
- Mortgage Loan
- Commercial Loan
- Career Loan
- Machinery Loan