Assets under management of NBFCs likely to see growth moderation in FY25: CRISIL Ratings

New Delhi: Growth in assets under management of non-banking financial companies may see a marginal dip in FY25 to 14-17%, from 15-18% pegged for the ongoing fiscal year, credit rating firm CRISIL Ratings said on Wednesday.

This comes as NBFCs calibrate their strategy following the Reserve Bank’s November 16 circular directing that consumer credit of banks and NBFCs shall attract a risk weight of 125%, as opposed to 100% earlier.

“This will result in a decrease in capital adequacy ratio (CAR), linked to the share of unsecured retail loans in overall AUM,” the agency noted. In simple terms, capital adequacy ratio is the ratio of a bank’s available capital in relation to the risks involved in terms of loan disbursement.

“The recent regulatory measures are targeted at unsecured retail loans and do not impact the secured asset classes where growth is expected to be steady,” CRISIL Ratings Managing Director Gurpreet Chhatwal underscored.

Unsecured loans constitute the third-largest segment in the overall pie of NBFC AUM, as the two largest traditional segments of home loans and vehicle finance comprise 25-27% each.

Going forward, diversification in product offerings and funding profile will be key constituents of the growth strategy of NBFCs, the ratings agency said.