2024 was a dynamic year for NBFCs amid shifting market conditions: Nalin Jain

As we conclude another year, it is essential to reflect on the key developments, challenges, and achievements that have shaped different sectors throughout the past 12 months. The year 2024 has been marked by dynamic shifts, rapid innovation, and the continued adaptation to both external factors and emerging trends.

Adgully’s annual feature – REWIND – revisits different sectors and identifies the key developments as well gauges the long-term impacts of those developments. We speak to a cross-section of industry leaders to bring a 360-degree view of the industry landscape, the growth trends, financial performance, disruptions, innovations, challenges and more.

In this Rewind 2024 article, Nalin Jain, Chief Marketing Officer, Godrej Capital, provides an overview of the Indian economy as well as the NBFC sector in 2024, the key trends, developments and innovations that dominated this sector in the year gone by. He also speaks about the headwinds and tailwinds expected in 2025, and more.

Overview of the Indian economy and NBFC sector in 2024

The Indian economy in 2024 showcased remarkable resilience despite geopolitical uncertainties and the buzz surrounding elections in India and the USA. The housing and MSME sectors remained steady, while manufacturing, real estate, and services saw strong momentum, driven by urbanisation and robust domestic demand. Government initiatives focusing on infrastructure and digitalisation were key catalysts for growth across industries.

While Q2 was a bit slow, optimism remains high for a rebound by the end of the fiscal year. What is particularly exciting is the growth emerging from Tier 2 and Tier 3 cities, highlighting how the economic base is expanding and aspirations are rising in these areas. Inflation presented challenges, but India’s solid economic fundamentals stood strong, proving the country’s ability to adapt and thrive even in tough times.

2024 was a dynamic year for NBFCs, marked by both challenges and opportunities as the sector strengthened its role in providing credit to underserved segments. While economic growth spurred demand for retail and MSME credit, creating avenues for NBFCs like Godrej Capital to expand their product offerings and geographical reach, the year also demanded agility in navigating shifting market conditions.

Technology proved to be a game-changer, streamlining operations with quicker loan disbursals and more efficient customer service. Despite persistent challenges around credit access in India, the sector made meaningful strides in promoting financial inclusivity. Regulatory compliance remained a cornerstone, showcasing the sector’s resilience and ability to adapt. Adding to this stability, the RBI’s decision to maintain the repo rate throughout the year provided a predictable environment, supporting both businesses and consumers.

Key trends and developments

Digital transformation was undeniably the defining trend of 2024. NBFCs embraced AI, ML, and data analytics to enhance customer service, improve risk assessment, and deliver innovative financial products. Customised financial products and quick loan disbursals became the norm as consumer expectations evolved. Social media played a growing role in strengthening digital engagement, enabling NBFCs to connect more effectively with their audiences. Regulatory oversight intensified, encouraging NBFCs to fortify their governance frameworks.

Additionally, partnerships with financial institutions grew, enabling NBFCs to scale faster and penetrate untapped markets, especially in semi-urban and rural areas. Thanks to advancements in technology, Trust, transparency, and operational efficiencies were at the forefront, helping NBFCs to build stronger relationships with customers.The focus also shifted toward improving operational efficiencies and driving greater financial inclusion.

Godrej Capital’s performance in 2024

For Godrej Capital, 2024 was a standout year. We expanded our footprint across 40 cities, reaching new customer segments and strengthening our position as a trusted financial partner. A major highlight was the launch of GenAI, which has revolutionised how we understand and serve our customers. By analysing 100% of our calls, emails, and NPS feedback, we have elevated our customer service to new heights. And this is just the beginning – it’s only going to get better from here.

Our innovative offerings, such as Flexi Funds and BizRewards, reaffirmed our commitment to delivering value-driven solutions tailored to customer needs. We are proud to have grown our customer base to over 30,000, with our loan book crossing Rs 14,500 crore. Despite this rapid growth, we have consistently maintained high NPS scores – a testament to our customer-obsessed approach and dedication to providing exceptional service. Operationally, we stayed efficient and agile, delivering a seamless digital experience while keeping our focus on meeting customer needs with precision and care.

Outlook for NBFC sector and the Indian economy in 2025

Looking ahead, 2025 promises to be a transformative year for the NBFC sector, with technology – particularly AI and GenAI – leading the way. The government’s continued emphasis on MSMEs and supportive policies for the NBFC sector is pushing financial institutions to not just stay compliant, but also drive inclusivity. This means reaching a wider, more diverse audience and expanding services into underserved markets.

At the same time, India’s economy is poised to benefit from a boost in private investments and government-led infrastructure projects, creating a ripple effect of growth opportunities. With these tailwinds, both NBFCs and the broader economy are well-positioned for a promising year ahead.

Godrej Capital’s expectations from 2025

At Godrej Capital, we have set ambitious targets for FY26. We aim to expand our presence to 100 cities and grow our Assets Under Management to Rs 30,000 crore. Diversifying our product portfolio is also a top priority, as we plan to introduce new offerings tailored to meet evolving customer needs. For this, we plan to invest further in technology and digital transformation, enabling us to deliver personalised, efficient, and innovative financial solutions.

At the heart of our journey is the 127-year-old legacy of Godrej – a philosophy rooted in the belief that what’s good for the country is good for business. This ethos inspires us to keep pushing forward, driving financial inclusion and empowering individuals and businesses alike. As we march into 2025, our focus will remain on innovation, customer-centricity, and creating meaningful impact across communities.

Headwinds and tailwinds expected in 2025

The coming year brings its share of challenges and opportunities. Rising interest rates and inflation may put some pressure on credit demand and repayment capacity, while regulatory changes could call for quick adjustments. But on the brighter side, strong economic fundamentals, increasing digital adoption, and growing awareness of financial products are all working in our favour. At Godrej Capital, we are confident that our agile mindset, focus on innovation, and commitment to our customers will help us navigate these shifts and keep driving growth.

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