Need for SBFCs/I : Need to create Small Business Finance Companies to support Small Business:

The Housing sector has Housing Finance companies. The Infrastructure sector has Infrastructure Finance companies. Much like this it is necessary to create a separate category of SBFCs or Small Business Finance Companies among the NBFCs. They should have a separate identity, rules and regulations which should factor in the social and economic role played by them in financing small businesses which the Banks are structurally unsuited to do.

Small Business Finance Companies will help:

Provide registered finance to the vital non-corporate small business sector.
Lead to greater formalisation of Indian economy.
Correct an anomaly – clubbing SBFCs with all NBFCs which is irrational, harms the economy and development.