NBFCs likely to see 7-9% growth in FY22: Icra

Mumbai: Non-banking finance companies (NBFCs) are likely to see a 7-9 per cent growth in their asset under management (AUM) in FY2022 but access to funding would be crucial for them to have a sustained improvement, says a report.

Icra Ratings in a report said NBFCs would require an additional funding lines of about Rs 1.9-2.2 lakh crore, apart from the refinance of the existing lines, to achieve a 7-9 per cent growth in AUM in FY2022.

The agency did a survey across non-banks, involving about 60 entities, which together account for over 50 per cent of the sectoral AUM and about 23 investors. "Non-banks (NBFC [excluding infra NBFCs] and housing finance companies (HFCs)) AUM growth would revive in FY2022 to about 7-9 per cent vis a vis a flattish performance in the current fiscal," the agency said in the report.

The segment's AUM had registered a growth at a CAGR of 16 per cent over the period March 2016-March 2020. The agency's vice-president, sector head (financial sector ratings) A M Karthik said, "Growth in FY2022 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. Some of the key segments which would bolster growth include gold loans, home loans, personal credit, rural finance and microfinance.

Growth in the vehicle finance (commercial vehicle, passenger vehicle), 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. NBFCs 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 per cent in FY2020 and about 10 per cent expected contraction in FY2021.