Non-banking financial companies (NBFCs) will raise their share of overall loans by 300 basis points (bps) to 17.6% in the next three fiscals, ratings agency Crisil said in a statement on Wednesday. This will be equivalent to the growth that the companies have seen in the last five years, largely on the back of mortgages and medium, small and micro enterprises (MSME) funding.
The growth in market share will come “by leveraging innovation, origination and customer connect, and by diversifying their funding profile”, Crisil wrote. NBFCs may even edge past public sector banks in terms of growth as the latter set remains circumspect about new lending because of the asset quality troubles they are battling.
The ratings agency expects NBFCs to grow the higher-yielding unsecured MSME financing book, going ahead.
Gurpreet Chhatwal, business head for large corporates at Crisil Ratings, said, “Domestic NBFCs have leveraged their unique strengths and some of them have scaled up to become world-class institutions. NBFCs with assets of over R40,000 crore more than trebled to 10 from three in the last four fiscals.”
Products that constituted just 16% of NBFC advances in fiscal 2012 will constitute 40% by fiscal 2019, the statement said.
Crisil expressed concerns around the loan against property (LAP) category.