Crisil Ratings in its latest report has said that 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 percent in the next financial year. It said 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 mentioned 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 percent next fiscal. According to the agency's president Gurpreet Chhatwal, despite an estimated GDP growth of 10 percent 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, he said 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. Besides, 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.