Heading for a contraction in the current fiscal, the first time in more than a decade, assets under management (AUM) of non-banking financial companies (NBFCs) are set to grow again at a relatively subdued 5-6% next fiscal. The turnaround will be led by larger entities with stronger parentage, top executives at CRISIL said.
“Despite an estimated GDP growth of 10% next fiscal, the 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.” Gurpreet Chhatwal, president, CRISIL Ratings, said in a web conference. “Additionally, 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,” he added.
While growth would be a challenge in the near term, it is significant to watch out how asset quality pans out as we approach the next fiscal, Mr. Chhatwal said.
