NBFC Sector in India | Kogta Financial India Limited
NBFC sector in India With the overall rebound in the economy, the non-banking financial companies (NBFCs) sector is expected to register good growth in FY 2023 and FY 2024 too. According to ICRA Ratings, NBFCs are likely to clock a loan growth of 10-12% during both these fiscal years and see an improvement in profitability of about 50 basis points.
With the RBI’s prompt corrective action (PCA) framework for NBFCs, they now enjoy further parity in terms of the regulations between banks and non-banks. Further, the Income Recognition, Asset Classification (IRAC) norms and their recent revision further create a level playing field for NBFCs with banks. All these policy reforms will enhance corporate governance which will lead to sustainable growth of the sector.
While retail-focussed NBFCs are expected to grow 12-14%, housing finance companies may grow at 10-12%. These growth rate forecast are based on an improvement in asset quality and a pick-up in overall credit demand.
Kogta Financial (India) Limited CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS 01-36 37-104 105-172 39 The report pointed out that NBFC asset quality has been improving steadily since December 2021 as borrowers gradually recovered from the pandemic-induced stress. They have witnessed higher collections and a lower-thananticipated share of restructured portfolio, estimated at 2% of total assets under management, as of September 2022.
As a result of all this, ICRA envisages that the majority stress from the restructured book is likely to be absorbed in FY 2022-23 and slippages are expected to remain rangebound. It expects the NBFC sector to report some moderation in reported asset quality indicators and credit costs by March 2023.
Where profitability is concerned, rising interest rates are expected to put some pressure on net interest margins. However, as the yield curve is flat, interest rates are expected to remain high for the next 9 to 12 months and not over the longer term.
With stable margins and moderation in credit cost, NBFCs seem to be headed for an improvement in profitability indicators. ICRA expects them to report a return of 2.6-2.9% on managed assets in FY 2023.https://www.icra.in/
