Bhopal|April’24| A staggering 42% growth in the past three years has propelled Non-Banking Financial Companies (NBFCs) to the forefront of the personal loan market in India. Unlike traditional banks, NBFCs offer a quicker and more flexible alternative for borrowers seeking personal financing.

Filling the Gap, Fueling Growth

The emergence of NBFCs stemmed from the unmet demand from traditional banks. Complex procedures and stringent eligibility criteria often left many borrowers, particularly salaried individuals and the self-employed, out in the cold. NBFCs stepped in, offering faster processing times and a more relaxed approach to credit assessment, catering to the growing need for immediate and flexible loan options.

A Journey of Evolution

NBFCs have come a long way since their inception in the early 1990s, with the establishment of regulations by the Reserve Bank of India (RBI) in 1993 marking a significant milestone. The increasing competition between NBFCs and banks has fueled innovation, leading to a wider range of loan products and services tailored to meet the specific needs of borrowers.

The NBFC Advantage: Faster, Easier, More Accessible

NBFC personal loans boast several advantages that make them an attractive option for borrowers. They are known for their:

1. Faster processing times: NBFCs often approve loans within 24 to 48 hours, compared to the days or weeks it can take with traditional banks.
2. Flexible eligibility criteria: NBFCs consider a wider range of factors beyond just credit score, making them a viable option for those with a less-than-perfect credit history.
3. Competitive interest rates: Interest rates on NBFC personal loans typically range from 10.99% to 36% per annum, offering borrowers competitive options.
4. Convenient online application: The rise of digital platforms has made it easier than ever to apply for an NBFC personal loan from the comfort of your home.
5. Niche offerings: Some NBFCs cater to specific segments, providing specialized loan products like two-wheeler loans, further personalizing the borrowing experience.

If you are planning to get a personal loan through NBFC, check out the eligibility criteria first!

NBFC Personal Loan Eligibility Criteria:

Personal loan eligibility criteria for NBFC (Non-Banking Financial Company) loans:

1. You need to be 20 or older to apply for a loan.
2. You should be under 60 years old by the time the loan needs to be paid back.
3. If you're self-employed, you can apply if you earn enough money as per the NBFC's standards.
4. You must have worked for at least one year.
5. Employees of the government, businesses, or multinational companies are welcome to apply.
6. You must live in India.

Different lenders might have different requirements.

Documents Required For NBFC Personal Loan:

To apply for a loan from an NBFC, you'll need the following documents:

1. Your PAN and Aadhaar card information is a must.
2. You can also provide Voter ID, Aadhaar card, PAN card, or driving license for your identity.
3. Bills like electricity or water or your house rental contract can be used to confirm your address.
4. You'll need to show your income or job details through salary slips or bank statements.
5. Your Voter ID or Aadhaar card can be used to confirm your age.
6. You should also have passport-sized photos ready.

Different lenders might have different requirements.

Applying For an NBFC Personal Loan

If you're interested in getting a loan from an NBFC, here’s a more detailed breakdown of the steps involved:

Step 1: Start by visiting the NBFC's official website or by downloading their mobile application on your smartphone.

Step 2: On their platform, you'll find a section to check if you're qualified for the loan. Here, you’ll need to provide some basic details about yourself.

Step 3: Once you know you’re eligible, you’ll need to complete the loan application form. This is where you’ll enter your personal information to decide how much money you want to borrow and for how long you want to take to repay it.

The final step is to verify your identity electronically, known as e-KYC (Know Your Customer). This usually involves uploading or providing digital copies of your identification documents.

If you are a CIBIL defaulter, Credmudra has an entire blog dedicated to personal loans for people with low CIBIL scores. Read: NBFC Loans Without CIBIL Score: Your Complete Guide!

Looking Ahead: A Promising Future

The NBFC personal loan market in India is expected to witness continued growth, fueled by factors like increasing digital adoption and the government's push for financial inclusion. However, stricter regulations and managing non-performing assets remain key challenges for NBFCs to navigate. Despite these hurdles, NBFCs are undoubtedly playing a crucial role in democratizing access to credit and shaping the future of personal finance in India.