Liquidity crisis casts shadow: NBFC top execs move out to join banks, fintech

Several senior professionals in the nonbanking finance space have quit over the past year and hundreds more are on the lookout for openings elsewhere as the sector reels under a liquidity crunch.
The departures have halted the trend of banking talent moving to NBFCs, with many top-tier executives, including CXOs, having moved back to — or searching for — safer avenues in fintech, banking, financial services and insurance (BFSI), entrepreneurship/ consulting or even bigger, wellcapitalised NBFCs, according to at least half-a-dozen hiring firms.
Among them are Manisha Lath Gupta, who moved from Clix Capital to Uber as marketing director-India and South Asia, and Ramesh Viswanathan, who left L&T Financial Services and is now chief bancassurance officer at Tata AIA Life Insurance.
At the top 30 NBFCs, hiring has been at a standstill, although there has been a churn of senior talent in the past six months.
“Around 30% of such professionals have moved to fintech or become entrepreneurs/consultants; 40% of them have moved to other NBFCs and 30% have moved back to banks,” said Kamal Karanth, cofounder of specialist talent solutions firm Xpheno, citing data put together for ET.
The NBFC sector is engulfed in a liquidity crisis after Infrastructure Leasing & Financial Services’ default last year.
‘A Passing Phase’
In the past three months alone, over 700 CVs of professionals with Rs 20 lakh-plus salaries from just about a dozen NBFCs have been circulating in the market, said a recruiter on condition of anonymity.
The reasons that have prompted the departure of senior leaders include stressed NBFCs putting the brakes on lending and hiring, a negative outlook for the sector and no immediate turnaround in sight. Almost all such executives had spent less than two years in their previous organisations.
“The rally of the last two years of banking talent moving to NBFCs has taken a pause in the recent meltdown. We are also noticing increasing flow of NBFC talent looking to go back to banks or large fintech platforms,” said Shuvarshika Mishra, head of banking and NBFC hiring at VitoAltor, an executive search firm.
Not surprisingly, negotiating power has been hit.
“Hikes for those who switch have been tempered from 40-50% levels in the heyday to 10-15% now. Senior executives now are looking for more stability,” said Anshul Lodha, regional director at Michael Page.
With measures for the sector outline in the budget, some senior executives said the current turmoil is a passing phase.
Finance minister Nirmala Sitharaman said in her budget speech on July 5 that NBFCs play an “extremely important role in sustaining consumption demand as well as capital formation in small and medium industrial segment. NBFCs that are fundamentally sound should continue to get funding from banks and mutual funds without being unduly risk averse”.
She also said the regulatory authority of the Reserve Bank of India over NBFCs will be strengthened.
For some executives who moved from banks and other NBFCs with hefty pay hikes, going back is not an option because of their optimism in the sector and their current salaries.
The core skills of these professionals are better harnessed in the NBFC and banking sectors than the heavily funded fintech sector, which tends to hire people from telecom, tech and ecommerce who bring them marketing and technology capabilities.