NBFCs or non-banking financial companies emerged in the 1960s primarily to fill the massive void left by the banking system. The banking system was urban-centric, rigid and traditional in their approach. They would not lend to risky customers such as those in the large informal sector of India. NBFCs provided localised credit and serviced borrowers with low collateral, farmers and small and medium-sized entrepreneurs in semi-urban/rural areas.
Over the years, NBFCs have evolved from being a set of loosely regulated, informal lenders to a highly sophisticated and critical arm of the mainstream Indian financial system. The need for credit exploded post-liberalisation in 1991 and although this led to massive expansion of NBFC credit and operations, it also exposed the sector to major systemic vulnerabilities. More recently, post-2000, they have matured and are now serving hyper-specialized and critically important segments of the Indian economy. This spans from Microfinance institutions who serve those at the bottom of the pyramid to retail mortgage companies to Infrastructure finance to gold loans. Apart from serving critical financial needs of specific sectors, NBFCs have actively started tapping capital markets via commercial papers, debentures and institutional funding.
As of 2026, NBFCs are seen as a major driver for India’s economic growth. Their role in providing MSME credit for the massive MSME sector in India is critical. Other areas such as rural housing credit and infrastructure financing are also important. The regulatory structure has also evolved alongside – with RBI categorising NBFCs into four layers-base, middle, upper and top with differential capital and compliance mandates. NBFCs also play a significant role in India’s digital transformation by using technology and AI to reduce operational costs and improving risk management.
The rapidly evolving needs of the financial sector also mean need for newer skills for the workforce. Traditional models are quickly becoming obsolete and the existing and future workers in NBFCs need to keep up. The complexity of financial products will increase – as the sector caters to the needs to ultra-specialised sectors such as home loans, infrastructure finance of MSMEs. This requires the manpower to understand the risk, business and compliance aspects of such complex financial products – both for efficient credit expansion as well for ensuring profitability. The other key need is to keep up with the technology, which is rapidly evolving. Workers need to be tech-savvy, agile and ready to adapt. Since the sector caters to a large category of diversified business needs and the number of customers is likely to be large, the NBFC companies need to be able to learn to make the best use of the most cutting-edge technology available. That will provide not only a competitive edge but also helps them innovate and contribute to India’s economic growth and welfare.
Traditional college degrees may fall short of the specific requirements of NBFC talent. To ensure day one productivity, training programmes should include the use of industry case studies and solving live projects. Internships are a good way to achieve this. Internships can also be embedded in industry-academia programmes designed specifically for a particular role. These programmes must be jointly designed by the university and the particular NBFC to make workers job-ready on day one.
Another aspect of skilling is for the existing employees. Because the sector is evolving rapidly and needs of customers are changing every day, it is very important to design short programmes for upskilling existing employees. Such programmes must include all aspects of the business – regulations (which keep changing), risk management (via use of modern AI tools) and customer service. Specific programmes on sales, compliance of leadership can also be developed.
With the growing need for specialised talent, universities and NBFCs can closely work together to create programs that aim to impart practical knowledge and hands-on training even before the candidates join the company. This ensures that new entrants are ready and get the ground running from day one. Such programmes also help students create a strong alumni network which they can rely upon when they join the NBFCs. This camaraderie becomes another reason why candidates feel at ease at a new job and have huge motivational benefits. When such programmes are taught by ex-bankers and industry professionals, students get a chance to learn about lived experiences instead of being completely lost about their future and career ladder. We’re already seeing a rise in such programmes and it’s just a matter of time that these become a norm. And when that happens, India will have a strong talent pipeline empowered with real skills.
(The views expressed are personal)
This article is authored by Aatash Shah, senior vice president and head of business, Manipal Academy of BFSI.
