Non-banking financial companies (NBFCs) are expected to grow their assets under management (AUM) 13-14% next fiscal, or twice the 7% pace logged last fiscal, Crisil said in a report.
This is due to robust credit demand piggybacking the ongoing economic rebound, the ratings agency added.
“Stronger balance sheets with higher provisioning and lower leverage, receding asset-quality concerns, and steadily normalising funding access provide a solid foundation for NBFCs to capitalise on credit demand,” said Gurpreet Chhatwal, MD, Crisil Ratings.
“Competition from banks will remain intense and the rising interest rate environment will exert pressure on margins and limit competitive ability, especially in the largest traditional segments of home loans and new vehicle finance,” he said. “Hence, diversification into higher-yielding segments such as unsecured loans, used-vehicle loans, and secured SME2 loans will be the focus areas for the larger NBFCs,” he added.
Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, Crisil Ratings said, “As large NBFCs turn towards non-traditional segments to enhance yields, we are likely to see more partnerships such as co-lending with emerging NBFCs focusing on specific asset classes, especially unsecured loans.”
“This allows the large NBFCs to expand to newer domains in a more cost-efficient manner while reducing time-to-market. For emerging NBFCs, this supports capital-efficient AUM growth,” he added.
