Non-banking financial companies’ (NBFCs) assets under management (AUMs) are likely to grow by 8-10 per cent in FY23. This growth will be helped by improvement in economic activity and strengthened balance sheet buffers, according to a report by CRISIL Ratings. The rating agency expects AUM growth to be at 6-8 per cent in FY22. Growth in the previous financial year (FY21) was 2 per cent.

The gross non-performing assets (GNPAs) of non-bank lenders were expected to rise by 25-300 basis points, based on asset class, following recent clarification on income recognition, asset classification and provisioning (IRAC) norms, Crisil said in the report on Monday. 

“After weathering multiple challenges over the past three fiscals, AUM of NBFCs and housing finance companies (HFCs) is set to grow 8-10 per cent next fiscal, riding on two tailwinds – improving economic activity and strengthened balance sheet buffers,” the agency said. 

CRISIL Ratings Managing Director Gurpreet Chhatwal said that many NBFCs had built higher liquidity, capital and provisioning buffers in the recent past. 

“That, combined with improving economic activity puts them in a comfortable position to capitalise on growth opportunities,” he said. 

Retail loans were expected to see reasonably broad-based growth in the current and next financial years, supported by a pick-up in demand and consequently underlying sales, the report said. 

Gold, home and unsecured loans should clock the fastest growth rates, it said. 

On the other hand, wholesale credit would continue to de-grow as platforms such as alternate investment funds gain currency.