NBFC AUM Growth Likely To Hit Four-Year High In FY23, Says Crisil

Vehicle loans—which command the lion’s share in NBFC assets—are expected to grow 11-13% in FY23, according to Crisil’s estimates. Unsecured loans are likely to lead the growth in NBFC assets in FY23.

While vehicle loans are expected to see a jump from 3-4% growth over the past two fiscals, rising interest rates and competition from banks are likely to make new vehicle financing less lucrative for NBFCs as they chase yields in the used vehicle segment.

“Unsecured loans, with the second-largest share (16-20%) in the NBFC AUM pie, may be the only segment to touch the pre-Covid era growth of 20-22% this fiscal,” Ajit Velonie, director at Crisil Ratings, said in the statement. Such loans are a combination of consumer loans and business loans to small and medium enterprises and are likely to be supported by increased consumer spending and macroeconomic recovery.

Even though most segments of NBFC lending are expected to see a revival in growth, wholesale finance remains a laggard with an expected growth rate of 2% in FY23. While the exit of players in the segment has created opportunities, these are likely to be tapped via alternative investment funds instead of on-balance sheet lending due to the risk averseness at NBFCs, Crisil said in its statement.

Inflation and higher-than-expected interest rates, it said, remain key indicators for asset growth at NBFCs.