{"id":5066,"date":"2019-03-01T08:29:00","date_gmt":"2019-03-01T08:29:00","guid":{"rendered":"\/blog\/?p=5066"},"modified":"2025-01-21T14:15:19","modified_gmt":"2025-01-21T08:45:19","slug":"effects-of-demonetization-on-nbfcs","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/blog\/loan-for-business\/effects-of-demonetization-on-nbfcs\/","title":{"rendered":"Effects of Demonetization on NBFCs"},"content":{"rendered":"\n

Narendra\nModi, the Prime Minister of India, announced demonetization of INR 500 and INR\n1,000 notes from 8th<\/sup> November 2016. This means that both INR 500 and\nINR 1,000 notes will no longer be considered as a legal tender. This decision\nwas taken to address issues related to corruption and black money. Demonetization\nis also expected to solve problems in regard to counterfeit notes and\nterrorism. Prime Minister Narendra Modi states that this will bring about a\nchange in the economic system of the country and will also eliminate black\nmoney. <\/p>\n\n\n\n

Know More<\/a><\/div>\n\n\n\n

The\nmove has indeed created a huge impact on numerous sectors. The lending industry, in particular, has witnessed a\npositive impact due to demonetization. The transition to a cashless economy has\nimproved savings in financial assets, thereby benefitting Non-Banking Financial\nCompanies (NBFCs), the backbone of lending.<\/p>\n\n\n\n

Impact\non NBFCs<\/em><\/strong><\/p>\n\n\n\n

  1. Housing finance<\/em><\/strong><\/li><\/ol>\n\n\n\n

    It\nis expected that interest rates for housing finance will continue to reduce. With\na reduction in interest rates, the demand for loans will increase to a great\nextent. This will benefit wholesale borrowers like Non-Banking Finance\nCompanies and Housing Finance Companies (HFCs). Even though NBFCs transacting\nin cash would be affected, experts believe that this will just be temporary.\nHowever, those NBFCs dealing through digital methods will not face any impact. <\/p>\n\n\n\n