Strategies For NBFCs To Lower Borrowing Costs

1. Strategies For NBFCs
To Lower Borrowing
Costs

2. Navigating Borrowing Costs:
Strategies for NBFCs
Non-Banking Financial Companies (NBFCs) face a perpetual
challenge in balancing borrowing costs with profitability. This
presentation delves into actionable strategies tailored to help
NBFCs excel in this competitive arena, ensuring sustained growth
and success.

3. Market Dynamics Impact Borrowing
Costs
NBFCs must stay vigilant regarding market dynamics, including
interest rate fluctuations, liquidity conditions, and economic
trends. By closely monitoring these factors, NBFCs can anticipate
changes, develop effective strategies, and mitigate risks, thus
influencing borrowing costs positively.

4. Diversification of Funding Avenues
Relying on a single source for funds exposes NBFCs to market
vulnerabilities. Exploring diverse funding avenues such as bank
borrowings, debentures, and securitization can distribute risks and
lead to lower borrowing costs. Rashesh Shah, Chairman and CEO
of Edelweiss Group, emphasizes the importance of diversification
for optimizing borrowing costs.

5. Enhancing Operational Efficiency
Streamlining operational processes through automation and
embracing technological advancements can significantly reduce
costs for NBFCs. By digitizing workflows and adopting efficient
risk management systems, NBFCs can enhance operational
efficiency, leading to cost savings reflected in borrowing expenses.

6. Strengthening Credit Assessment
Practices
Sound credit assessment practices are essential for an NBFC's
profitability. Implementing robust risk assessment models and
leveraging data analytics can minimize default risks, enhancing
creditworthiness and potentially lowering borrowing costs. Abhay
Bhutada, MD of Poonawalla Fincorp, highlights the impact of
credit ratings on borrowing expenses.

7. Fostering Transparency and
Governance
Transparency and strong governance practices instill trust among
stakeholders and lenders. Maintaining transparent financial
reporting and adhering to regulatory standards attract investors and
help secure funds at favorable terms, positively impacting
borrowing costs.

8. Leveraging Strategic Alliances
Collaborations within the financial sector offer NBFCs access to
new markets and diversified product offerings. Partnering with
banks, fintech companies, or other NBFCs can provide
cost-efficient avenues for funding, potentially lowering borrowing
costs through synergies and alliances.