HDFC Bank vs Bajaj Finance: Which stock is better?

Equitymaster

  • A formidable bank or a growing NBFC: which one should you prefer?

When we think of getting a loan, we think of banks right away. But there are other kinds of financial companies too that contribute to enhancing the credit offtake in the system.

These financial companies include non-banking financial companies (NBFC), microfinance institutions (MFI), small finance banks (SFB), regional rural banks (RRBs), etc.

These companies along with scheduled commercial banks (SCBs) make up the Indian financial ecosystem.

When it comes to credit creation, banks are indisputable leaders. However, NBFCs have been recording higher credit growth in the last few years.

NBFCs are the largest borrowers for banks. In the last decade, NBFCs went from being 12% of banks’ balance sheets in 2010 to over 25% today. That’s phenomenal growth, isn’t it?

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