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Retail lending growth forecasted for NBFCs

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Retail lending growth forecasted for NBFCs

Retail loan books for NBFCs (non-banking financial companies) should see 19-21% of growth for the present financial year. This will majorly be spurred by the growing demand for CV (commercial vehicle) loans as per reports. NBFCs are major lenders when it comes to this category and the growth in sales volumes of new vehicles in this industry will benefit NBFCs along with steady demand for used vehicles in FY2018-19 as per reports.

Reports state that NBFC retail credit will grow by 19-21% this financial year from Rs. 7.5 trillion as of the 31st of March, 2018. Credit given to SMEs by NBFCs should increase by 23-25% for this financial year due to soaring demand, increased requirements for working capital after the GST roll-out and lower availability of credit from banks. As per reports, unsecured personal credit and micro-finance combined increased to 15% for March 2018 as compared to 8% for March 2015 with CAGR of 45% observed. This segment should witness growth of 40% for FY2018-19 as per reports.

Unsecured credit is now the subject of higher emphasis with a bid towards enhancement of diversification of products and higher returns from business. Borrowers are now reaching out to NBFCs more and there is better availability of data from credit bureaus along with better technology and systems for credit assessment. Additionally, retail asset quality witnessed a sharp uptick for NBFCs in the last financial year with 90 days past DPD coming down to 4.4-4.5% as compared to 4.7-4.8% for FY2016-17.

The asset quality improvement was spurred by major increases in the portfolio and overall recoveries which were more in H2 FY2017-18 as per reports. There was more SME credit inclusive of loans against property, CV loans and loans for construction equipment and tractors which benefited NBFCs in the previous financial year.

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