| Assets Under Management (AUM) |
The total market value of the financial assets managed by the NBFC on behalf of its clients. |
Sum of the market value of all financial assets managed |
Varies widely by NBFC size and type |
| Net Profit Margin |
Measures the percentage of revenue that turns into profit after all expenses are deducted. |
(Net Profit / Revenue) × 100 |
15-20% |
| Non-Performing Assets (NPA) |
Loans or advances that are in default or in arrears on scheduled payments of principal or interest. |
Sum of all loan amounts for which interest or principal payments are overdue for 90 days or more |
<5% for well-performing NBFCs |
| Capital Adequacy Ratio (CAR) |
Indicates the NBFC’s capital in relation to its risk-weighted assets. |
(Tier 1 Capital + Tier 2 Capital) / Risk-Weighted Assets |
Minimum 15%, higher for riskier profiles |
| Liquidity Ratio |
Assesses the NBFC’s ability to meet its short-term obligations without raising external capital. |
(Liquid Assets / Short Term Liabilities) × 100 |
>100% |
| Return on Assets (ROA) |
Measures how efficiently a company can manage its assets to produce profits. |
(Net Income / Total Assets) × 100 |
1.5-3% |
| Cost-to-Income Ratio |
Indicates the efficiency of an NBFC in terms of managing its operating costs to generate revenue. |
(Operating Expenses / Operating Income) × 100 |
40-50% for efficient operations |
| Return on Equity (ROE) |
Measures the profitability of a business in relation to its equity. |
(Net Income / Shareholder’s Equity) × 100 |
12-15% |
| Debt-to-Equity Ratio (D/E) |
Indicates the proportion of equity and debt used to finance the company’s assets. |
Total Liabilities / Shareholder’s Equity |
4-6x for growth-oriented NBFCs |
| Gross NPA Ratio |
The ratio of the total gross NPAs to the total advances (loans) of the NBFC. |
(Gross NPAs / Total Advances) × 100 |
<6% |
| Net NPA Ratio |
The ratio of net NPAs (gross NPAs minus provisions) to the total advances of the NBFC. |
(Net NPAs / Total Advances) × 100 |
<3% |
| Interest Coverage Ratio |
Measures the NBFC’s ability to meet its interest obligations from its operating income. |
Earnings Before Interest and Taxes (EBIT) / Interest Expenses |
>2x |
| Efficiency Ratio |
Assesses the NBFC’s efficiency by comparing its operating expenses to its net revenues. |
(Non-Interest Expense / (Net Interest Income + Non-Interest Income)) × 100 |
50-60% |
