NBFC's AUM will increase by seven to nine per cent

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Mumbai, Ta. 07 January 2021, Thursday

The Asset Under Management (AUM) of non-banking finance companies (NBFCs) is expected to grow by seven to nine per cent in the next financial year, but the flow of funds is crucial for them to sustain this improvement, according to a report by ratings agency ICRA.

To achieve seven to nine per cent growth in AUM in FY 2021-2, NBFCs will need funding of Rs 1.50 lakh to Rs 2.50 lakh crore.

ICRA has prepared this report by surveying about 50 NBFCs in the country which have more than 50% AUM in the total AUM of NBFCs. NBFC's performance in the current financial year has been stable in terms of AUM. No significant growth was observed in AUM.

From March 2016 to March 2020, the AUM in the region has seen a compound growth of 12 per cent. The AUM is projected to grow by seven to nine per cent in the coming financial year, given the proposed increase in demand from most of the target sectors.

Demand for gold loans, home loans, personal loans, etc. is expected to pick up in the coming year. However loans associated with business activity may take time to grow. It will take time to see growth, especially in commercial properties and vehicle loans.

Commercial real estate and corporate loans are expected to decline in the next financial year. However, given the proposed increase in demand for loans from other segments, NBFCs will need adequate funding.

There is a risk of new NPAs arising out of restructured loans. NPAs are expected to increase by 1 to 2 per cent by March 2021.


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