The assets under management (AUM) growth of non-banking financial companies (NBFCs) in the country is set to moderate to 15-17 per cent in the current and next fiscals (FY25 and FY26), according to a report on Monday.
The expected growth will still be above the decadal average of 14 per cent (fiscal 2014-2024), according to a report by CRISIL Ratings.
The AUM growth of NBFCs in the two largest traditional segments — home and vehicle loans (45 per cent of NBFC AUM) — will continue to be driven by fundamentals with limited impact of the above factors.
Home loans are expected to maintain steady CAGR of 13-14 per cent as policy initiatives, such as the re-introduction of the Interest Subsidy Scheme, will provide impetus.
Housing finance companies (HFCs) focused on the affordable segment (Rs 25 lakh loan ticket size) are likely to grow faster at CAGR of 22-23 per cent, the report noted.
Growth in vehicle finance is estimated to moderate but remain healthy at CAGR of 15-16 per cent.
While unit sales growth of new vehicles will be lower, the shift to higher-value vehicles and continued focus on used assets should provide an offset and support overall AUM growth, the report noted.
“Most of the large NBFCs, especially the parent-backed ones, have tapped alternative funding sources such as capital market instruments, foreign currency borrowings and securitisation over the last three quarters. For the rest, the ability to continue tapping such sources at an optimal cost remains crucial to growth,” said Ajit Velonie, Senior Director, CRISIL Ratings.
Funding is a very important factor that influences the growth of NBFCs. Bank lending to NBFCs, which has been largely supportive over the past 5-6 years, has remained in the range of Rs 13-13.5 lakh crore since November 2023 when regulatory risk weights were raised.
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