ICRA has revised the growth outlook for non-banks to 10-12% for the Mudra fiscal. within this retail Non-banks are expected to grow at 12-14% while housing finance companies are expected to grow at 10-12%.
Rating agency said growth will be broad based across various sub sectors microfinance And personal loans are leading the growth. Vehicle financing loans that include commercial vehicles and passenger vehicles, which saw significantly lower growth since 2020, are also expected to report higher growth numbers.
Manushree Saggar, Vice President, Financial Sector Ratings, said, “Disbursements to non-banks and housing finance companies remained above pre-pandemic levels for three consecutive quarters, indicating that the industry has finally come out of a long period of trough. ” ICRA. According to a survey conducted by the rating agency, most non-banks revised their growth estimates for the current financial year. Around 63% of issuers (by value) and 67% (by number) are expecting AUM growth of 15% in FY2023.
ICRA expects non-banks to report some reduction in reported asset quality indicators and credit costs by end-March 2023.
“Asset quality indicators for these non-banks have been improving steadily since December 2021 as borrowers gradually recover from pandemic-induced stress,” said a press release. “The improvement is due to higher collections, a lower-than-anticipated share of the restructured portfolio and ratios benefiting from the base effect of controlled slippage and higher growth from this book.”
The agency said some improvement in asset quality could also be due to higher write-offs which remained high at 2.1%. NBFC and 0.5% for HFCs in the first half of the current financial year.