Abstract: Non-Banking Financial Companies (NBFCs) play a pivotal role in India’s financial ecosystem by complementing traditional banks in delivering credit to underbanked and underserved segments. This project undertakes a comprehensive study on the financial performance and growth of select prominent NBFCs in India over the period 2020 to 2025. With the Indian economy undergoing rapid changes due to the pandemic, policy reforms, digitization, and evolving market dynamics, the role of NBFCs has gained renewed significance. This study focuses on analyzing the annual returns and associated risks (measured through standard deviation) of key NBFCs to assess their profitability, stability, and growth trends in a changing economic landscape. The companies analyzed include industry leaders such as Bajaj Finance, Muthoot Finance, Shriram Finance, and others that have demonstrated notable financial activity during the study period. These NBFCs cater to various sectors, including consumer finance, gold loans, vehicle loans, microfinance, and housing finance, reflecting the diversity of services in the NBFC domain. The selection of companies was based on their market presence, financial transparency, and relevance in the Indian financial market. The project applies quantitative tools to examine annual return data and calculate standard deviation, enabling a comparative view of performance and risk across different NBFCs. By analyzing yearly trends, the study highlights how each company responded to challenges such as the COVID-19 pandemic, liquidity crises, changing regulatory norms from the Reserve Bank of India (RBI), and digital transformation pressures.

The findings show that while some NBFCs demonstrated robust financial resilience and continued growth, others experienced fluctuations and increased exposure to risk. For instance, Bajaj Finance exhibited strong returns with moderate risk levels, while companies like Muthoot Finance showcased stability due to their niche gold loan market positioning. Beyond numerical analysis, the project also explores qualitative aspects, such as the regulatory framework governing NBFCs, the impact of RBI guidelines on credit policies, and the strategic measures adopted by companies to remain competitive. It discusses how the sector is becoming increasingly regulated, ensuring greater transparency and better risk management but also demanding higher compliance and adaptability from the companies involved. This study aims to offer valuable insights into the structural and financial transformation of NBFCs and their contribution to economic growth, especially in rural and semi-urban areas. It also seeks to understand how these institutions can balance growth with sustainability, especially in the face of economic disruptions. By doing so, the project aspires to guide future financial decisions, policymaking, and academic inquiry into India’s evolving financial services sector. In conclusion, the analysis underlines the critical role that NBFCs continue to play in democratizing access to credit in India. Despite facing regulatory tightening and market competition, their ability to innovate, localize financial solutions, and expand outreach makes them an indispensable component of India’s financial future. This project not only evaluates past performance but also provides a lens through which to view future opportunities and challenges for the NBFC sector.

Keywords: Non-Banking Financial Companies (NBFCs), Financial Performance, Annual Returns, Risk Analysis, Growth Trends, Standard Deviation, RBI Regulations, Economic Impact, Credit Distribution, Indian Financial Sector.

| DOI: 10.17148/IARJSET.2025.12578