Why NBFCs like AFI are India’s Economic Backbone | AFI

The Driving Force of India’s $5 Trillion Dream

Big economic goals are often explained through large numbers, GDP targets, infrastructure spending, exports. But growth on the ground usually looks much smaller than that. It shows up in working capital for a small business, short-term credit for a household, or access to funds when timing matters more than scale. This is where NBFCs step in.

As India works towards a $5 trillion economy, the role of NBFCs has quietly expanded. They operate in the gaps traditional systems don’t always reach, offering flexible, faster access to credit for individuals and businesses that keep everyday economic activity moving. NBFCs like AFI aren’t chasing scale alone; they’re enabling participation. And that participation, repeated millions of times, is what turns ambition into actual growth.

Bridging the Credit Gap for the Underserved

NBFCs end up working in spaces that don’t always fit neatly into bank processes. Not because banks are unwilling, but because their systems are built differently.

• Many borrowers don’t have perfect paperwork, even though their income is steady. NBFCs are often better equipped to work with that reality.

• Credit needs are sometimes small and time-sensitive. Traditional banking timelines don’t always match that urgency.

• Self-employed individuals and informal workers don’t always show income the “right” way on paper. NBFCs look beyond just salary slips.

• Regional and local lending needs vary widely. NBFCs tend to adapt faster to these differences

• Access matters as much as eligibility. Digital-first NBFCs reach customers who may never walk into a branch.

This is less about replacing banks and more about filling the gaps they’re not designed to handle.

Ayaan Finserve India (AFI): A Catalyst for Indian Personal Credit Needs

Ayaan Finserve India works in a space that often gets overlooked, small, short-term personal credit that solves real problems without creating long-term burden. As an RBI-registered NBFC, AFI operates within a regulated framework while staying flexible enough to meet everyday borrowing needs.

AFI focuses on small-ticket personal loans, designed for situations where timing matters more than scale. These are loans taken to manage immediate expenses, smooth short cash gaps, or handle costs that can’t be postponed. The amounts are kept practical, usually up to ₹1 lakh, and the tenures are structured so repayment doesn’t stretch on indefinitely.

What sets AFI apart is not just the product, but the role it plays. By serving borrowers who may not always fit traditional bank filters, due to income patterns, urgency, or loan size, AFI helps bridge a very real credit gap. The approach is digital, straightforward, and deliberately cautious about over-lending. The goal is access, not excess.

In a credit ecosystem where speed is increasing and choices are expanding, AFI’s role stays focused: provide responsible personal credit where it’s actually needed.

NBFC Powering the MSME Sector: The Engine of GDP

When people talk about India’s economy, MSMEs are usually mentioned in passing. On the ground, they do far more than that. Small and medium businesses together contribute close to 30% of India’s GDP and support the livelihoods of over 110 million people. Most of this activity runs on tight cash cycles, not long financial runways

This is where NBFCs have quietly become critical. Over the last few years, lending to MSMEs by NBFCs has grown at a much faster pace than traditional channels. Since FY19, MSME-focused NBFC portfolios have expanded at a compound annual growth rate of over 36%, reflecting how dependent this segment has become on flexible credit.

The gap became especially visible in 2022–23. NBFC lending to MSMEs rose by over 40%, while banks grew at a much slower pace, closer to the low teens. For many small businesses, speed, understanding of cash flow, and willingness to assess risk differently mattered more than access to large balance sheets.

Unlike conventional models that rely heavily on audited statements alone, NBFCs often use alternative signals, GST filings, transaction patterns, utility payments, to assess repayment ability. This approach works better for businesses with uneven income cycles, seasonal demand, or informal revenue patterns. It doesn’t remove risk, but it makes financing more realistic for how MSMEs actually operate.

For a sector that runs the engine of employment and production, this kind of credit support isn’t optional anymore. It’s structural.

The Digital Revolution: Speed, Efficiency, and Innovation

Things move faster now. Not because people are rushing, but because fewer steps are visible. What once needed forms, calls, and follow-ups now happens in the background.

Data gets checked early. Gaps show up sooner. Decisions don’t wait for files to move between desks. It’s quieter than before, but quicker.

Most of the journey is digital. Onboarding, checks, confirmations. No branches, no physical copies, no long pauses. That’s become normal.

This has also changed who gets looked at. Income isn’t always neat. Cash flow isn’t always monthly. Systems today handle that better than rigid formats ever did. It’s still imperfect, but closer to how people actually earn.

Technology hasn’t made lending risk-free. It’s just made delays shorter. Judgment still matters. It always has.

Empowering Women and Rural Communities

Credit works differently once you step outside cities. Income isn’t always regular. Paperwork isn’t always complete. That doesn’t mean needs are smaller. It just means they show up differently.

In many households, women handle day-to-day money decisions. School fees. Medical costs. Small work expenses. Credit, when it’s available in the right size, helps keep things moving without creating long-term pressure.

NBFCs tend to fit better in these settings. Loan amounts are smaller. Processes are simpler. Decisions don’t rely only on formal histories that many borrowers never had a chance to build.

In rural areas, digital access has reduced distance more than anything else. Applications happen without travel. Follow-ups don’t mean lost workdays. Money reaches people where they already are.

None of this is dramatic. But over time, it changes how credit is used, quietly, and more often on the borrower’s terms.

Future Outlook: CAGR and Economic Impact

The NBFC sector is still growing, even with a few rough edges. Liquidity pressures haven’t disappeared. NPAs remain something lenders watch closely. But momentum hasn’t stalled either

Between 2021 and 2026, the industry is expected to grow at an annual pace of around 18.5%. That’s not accidental. Demand for flexible credit continues to rise, especially outside traditional banking channels.

What stands out is consistency. Year after year, NBFCs are finding space where formal credit moves slowly. Smaller loans. Faster decisions. Products shaped around real cash flows, not ideal ones.

If this trend holds, NBFCs won’t just add scale. They’ll keep shaping how credit reaches people who were earlier at the margins, steadily, without much noise.

Frequently Asked Questions (FAQs)

Are NBFCs regulated or is it unsafe to deal with them?

NBFCs are not unregulated entities. In India, they come under the Reserve Bank of India. There are rules they have to follow. That said, people should still check whether the NBFC is RBI registered before taking a loan.

Why do NBFCs lend when banks are not comfortable doing so?

Banks usually look for fixed patterns. Salary slips, long credit history, clear paperwork. NBFCs don’t always work that way. They try to understand the borrower’s situation beyond just documents, which is why they take calls banks often avoid.

Can every NBFC be trusted?

No. Some are reliable and transparent, some are not. Borrowers should always read the terms, look at charges, and see how clearly things are explained before agreeing to a loan.

What do NBFCs really do for people who don’t get bank loans?

They give access. Many borrowers are first-timers or work in informal jobs. NBFCs help such people enter formal credit instead of staying completely outside the system.