Project finance Bank v/s NBFC

Jun 21st, 2015
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Considering the growing use of project finance, we undertook this project with an objective of understanding the salient features of project finance. It is a method of financing very large capital intensive projects, with long gestation period,

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Project financeBank v/s NBFCExecutive Summary Considering the growing use of project finance, we undertook this project with an objective of understanding the salient features of project finance. It is a method of financing very large capital intensive projects, with long gestation period, where the lenders rely on the assets created for the project as security and the cash flow generated by the project as source of funds for repaying their dues. As project financing is adopted by a majority of companies at least once in their lifetime, we decided to study this concept in detail. Banks as well as non-banking financial companies provide project financing. Banks enjoy a major market share among the borrowers and the NBFC firms are lagging far behind and will slowly loose their market share if adequate steps are not taken. Banks are usually preferred over NBFC firms due to the security aspect and brand name. also the documentation process is one such aspect which the borrowers find lengthy and tiresome in both the banks and NBFC. Awareness regarding the nationalized banks providing project finance is more thanthe NBFC firms providing the same. Also a borrower chooses a project finance provider mainly due reference and time frame within which the loan would be approved. The NBFC firms need to take adequate steps to improve their position in the minds of the borrowers so as to stay in the market. The NBFC firms should try to inculcate in the minds of the borroweers

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