NBFCs AUM to grow at 5-6 per cent in FY22: Crisil

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December 11, 2020 7:40 PM

“Currently they have about 18 per cent market share in the total credit pie and we believe that will slip to 17 per cent in FY22,” Chhatwal said.

Crisil president Gurpreet Chhatwal said overall NBFC sector growth is likely to be slower.

The asset under management (AUM) of non-banking finance companies, including housing finance companies, is likely to see a positive growth but will be muted at 5-6 per cent in the next financial year, according to Crisil Ratings.

The turnaround will be led by larger entities with stronger parentage. In the current fiscal, NBFCs’ AUM is likely to de-grow for the first time in the last two decades, it said.

“Navigating a raft of headwinds for over two fiscals – culminating in de-growth in the current fiscal – assets under management (AUM) of non-banking financial companies (NBFCs) is set to grow again –  although at a relatively subdued 5-6 per cent next fiscal,” the agency said in a report.

According to the agency’s president Gurpreet Chhatwal, despite an estimated GDP growth of 10 per cent next fiscal, overall NBFC sector growth is likely to be slower because access to funding remains a challenge due to concerns about the impact of the pandemic on asset quality.

“Additionally, competition is expected to be more intense from banks – which are flush with low-cost deposits and better placed with improved capital buffer than in the previous years,” he said.

The rating agency said the challenges faced by NBFCs in gaining funding access at optimal costs will mean they cede overall market share to banks in the near term, especially in their two biggest segments – home loans and new vehicle finance.

“Currently they have about 18 per cent market share in the total credit pie and we believe that will slip to 17 per cent in FY22,” Chhatwal said.

The report said the trend in monthly collection efficiency ratio till November shows a marked improvement, especially in the vehicle finance segment. However, three months after moratorium, there is still some way to go before collections reach pre-pandemic levels.

It estimates the stressed assets {gross non-performing assets (GNPA) + potential stress in loan book.

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