Synopsis:- Large business groups increasingly rely on in-house NBFCs to drive growth, profitability, and customer retention. With India’s NBFC sector at $326 billion and retail credit growing 15% CAGR, integrated financing boosts margins, expands rural reach, and converts one-time buyers into long-term financial customers.
Walk into any major Indian business group today, whether it’s the Tatas, Mahindras, Birlas, or even newer players, and you’ll find they all have one thing in common: their own Non-Banking Financial Company (NBFC). This isn’t just a coincidence. It’s become almost mandatory for survival and growth in India’s complex business landscape.
The Financial Oxygen for Business Growth
Think of NBFCs as the financial oxygen that keeps business ecosystems alive. For conglomerates, having an NBFC is like owning the petrol pump when you’re selling cars. It completes the value chain. When Hero MotoCorp sells a motorcycle, Hero FinCorp finances it. When Mahindra manufactures a tractor, Mahindra Finance funds the purchase. This vertical integration creates a seamless customer experience while capturing additional revenue streams.
The NBFC sector in India reached approximately USD 326 billion in 2023, driven by a rising middle class, enhanced financial inclusion, and positive policy interventions. This explosive growth represents a massive opportunity that conglomerates simply cannot ignore.
The Bottom-Line Benefits
Running an NBFC delivers three critical advantages. First, it’s incredibly profitable. Credit has historically grown faster than India’s GDP, with NBFC credit witnessing growth at approximately 11% CAGR between fiscals 2019 to 2024. Second, it increases customer stickiness. When you finance someone’s purchase, you build a long-term relationship, collect valuable data, and create opportunities for cross-selling. Third, it provides strategic flexibility, access to capital markets, the ability to manage cash flows, and leverage during economic cycles.
The financial mathematics is compelling, too. The retail credit market in India stood at Rs 7,51,000,000 lakhs as of Fiscal 2024, growing at a CAGR of 15% between Fiscals 2019 and 2024. That’s a pie every conglomerate wants a slice of.
Reaching the Unreachable
Traditional banks often struggle to serve India’s vast semi-urban and rural markets. NBFCs excel here. They understand local dynamics, offer customized products, and use technology to reduce costs. For conglomerates with existing distribution networks, whether it’s two-wheeler dealerships, tractor showrooms, or consumer goods outlets, adding financial services is a natural extension.
Many large conglomerates that had multiple NBFCs in the group have undertaken mergers with a view to creating a single, larger NBFC entity, supported by the RBI’s goal of reducing licensed entities within groups. This consolidation trend shows how seriously businesses take their NBFC operations.
Example: Hero MotoCorp’s Consumer Retention Masterclass
Hero MotoCorp’s Hero FinCorp demonstrates how NBFCs create unbreakable customer bonds. When a customer walks into a Hero dealership to buy a Splendor or an Xtreme, Hero FinCorp is right there offering instant loan approvals. With 99% of its two-wheeler loans coming through Hero’s own dealerships, the company has essentially locked in its customers at the point of sale.
But the genius doesn’t stop there. Once a customer takes a loan, Hero FinCorp maintains contact through EMI collections, service reminders, and upgrade offers. This continuous engagement means when that customer is ready for their next bike three years later, they’re not just coming back for the product they’re coming back to a familiar financial partner who already knows their credit history and can offer them a better deal instantly.
The retention strategy extends beyond just financing bikes. Hero FinCorp now serves over 11.8 million customers and has smartly diversified into personal loans, used car financing, and loans against property. This means a customer who bought their first Hero bike on EMI can later get a personal loan for their wedding, finance their car upgrade, or even leverage their property—all while staying within the Hero ecosystem.
Moreover, this multi-product approach transforms a one-time bike buyer into a lifetime financial customer, generating recurring revenue streams that far exceed the profit from a single motorcycle sale.
Conclusion
NBFCs have evolved from support arms into core profit engines for Indian conglomerates. By owning financing, groups deepen customer relationships, unlock faster credit-led growth, and extend reach beyond banks. In a credit-hungry economy, an in-house NBFC is no longer optional; it’s a strategic necessity for scale, resilience, and long-term value creation.
Written by Abhishek Singh
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