PERFORMANCE OF NON-BANKING FINANCIAL COMPANIES IN INDIA - AN EVALUATION

Abstract

Non-banking financial and investment companies operate as an important adjunct
to the banking sector in financial intermediation. They provide support to the capital
market through investment holding, share trading and merchant banking activities, to the
credit market through short and medium-term loans and also help in acquiring long-term
assets through lease and hire purchase activities. This article analyses the performance of
non-government financial and investment companies (other than banking, insurance and
chit-fund companies) during the year 2008-09. The study is based on the audited annual
accounts of 1,215 companies, which closed their accounts during the period April 2008 to
March 2009. The segment of financial and investment companies in the private corporate
sector is highly skewed. The presence of a large sized company, viz., Housing
Development Finance Corporation (HDFC) Limited in the study would exert
considerable influence on the overall performance of the companies in this group in terms
of various quantitative measures. In view of such marked skewness in the size structure,
the analysis presented in the article excludes results of HDFC. Further, it is observed that
the results of three other companies are in large variance with the remaining companies
and accordingly these companies are also kept outside the scope of the study. Thus, the
present analysis is confined to 1,211 companies. However, the data on all the select 1,215
companies including HDFC and other three outlier companies are separately presented.
The study also presents comparable data for the preceding two years 2006-07 and 2007-
08 for the same set of companies, based on the analysis of their accounts for the
respective years.