‘NBFCs may see growth revive in FY22’

Growth in assets under management (AUM) of non-banking financial companies, or NBFCs (excluding infrastructure NBFCs), and housing finance firms will revive in FY22 to about 7-9% vis-a-vis a flat performance during FY21, said ICRA.

The findings were based on a survey conducted across 60 NBFCs, which together account for more than 50% of the sectoral AUM and about 23 investors.

“Growth in FY22 is envisaged to be driven by the improvement in demand from all the key target segments vis a vis current fiscal, which was impacted by the COVID-19 lockdown,” said A. M. Karthik, V-P, sector head financial sector ratings, ICRA.

“Growth in the vehicle finance [commercial vehicle, passenger vehicle etc], business loans including loan against property and other commercial lending segments, which are closely linked to the economic activities are expected to take longer to register a reasonable revival,” he said.

He said non-bank exposures to the commercial real estate and other large corporate/wholesales exposures are expected to register a decline even in FY2022 after the decline of about 15% in FY2020 and about 10% expected contraction in FY2021.

As per the survey, majority (70%) of issuers and investors do not expect co-lending to account for less than 10% of non-bank AUM over the next 2-3 years.

“Access to adequate funding, therefore, would remain critical for the sector to register a sustained improvement in growth,” he added.

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