Assets under management of NBFC to fall first time in two decades: CRISIL

CRISIL on Wednesday released a report on the assets under management (AUM) of non-banking financial companies (NBFCs), in which, it expects the AUM of these NBFCs to dip 1-3 per cent in FY21E, for the first time in almost two decades as fresh disbursements have witnessed a significant fall.

The credit rating agency noted that excluding the top five NBFCs, the fall is expected to be even severe at 7-9 per cent. It added that the AUM of the shadow banking sector is estimated to have grown by 4-6 per cent in FY20.  The report said while, disbursements across segments are expected to fall 50-60 per cent, lower repayments during the loan moratorium period (March 1, 2020, to August 31), and capitalisation of interest accumulated, however, will help to act as a cushion for NBFCs amid a decline in their AUM.

Besides, it said that the real estate and structured credit focussed NBFCs are likely to witness a decline of 10-12 per cent in their AUM in FY21E. However, gold loan NBFCs and home loan NBFCs are likely to witness a growth of 14-16 per cent and 0-2 per cent in the ongoing fiscal, respectively. 

However, the rating agency added that the silver lining would be the gold loans, which constitute around 5 per cent of the AUM. It further pointed out that the growth here is seen to be relatively higher as more individuals and micro-enterprises go for it to meet immediate funding needs. Considering the surplus liquidity with banks along with a focus on the retail asset classes segment, the banks are likely to give competition in the conventional asset classes like home loans and vehicle finance.