AFTER a growth moderation in FY21, Non-Bank Finance Companies (NBFCs) are estimated to witness a 9.5 per cent jump in their assets under management in FY22, a report recently said. Housing Finance Companies (HFCs) will post a higher growth at 10 per cent as home sales go up, India Ratings and Research said, maintaining its “stable” outlook on both NBFCs and HFCs for FY22. It estimated the growth to slowdown to 4-5 per cent for NBFCs and 6.5 per cent for HFCs in FY21, driven largely by the impact of the coronavirus pandemic.

 

The system liquidity has improved considerably while the majority of large non-banks have strengthened their capital buffers and the sector has started witnessing disbursement growth, the rating agency said. The wide differential among NBFCs’ funding costs is likely to push the sector to consolidate, especially in the sectors with a thin margin profile and limited product differentiation, it said, adding the strong regulatory support in FY21 ensured adequate liquidity.

 

From an asset quality perspective, wholesale NBFCs will face challenges in FY22, the agency said and maintained the negative outlook on such entities. Stress due to the pandemic has moderated due to Government schemes which have led to lower softer delinquencies and moderate addition to Gross Non-Performing Assets (GNPAs), it said, pointing out that the overall stressed assets will be higher than a recent RBI estimate of 8 per cent.