NBFCs Asset Under Management to cross Rs 50 lakh cr by March 27; MSME credit quality raises red flag

New Delhi [India], November 24 (ANI): The assets under management (AUM) of non-banking financial companies (NBFCs) is set to grow at steady 18-19% this fiscal and the next, and cross the Rs 50 lakh crore mark by March 2027, said Crisil Ratings in a report on Monday.

It said the growth will be driven by whetted consumption demand. "Recent policy measures, such as rationalisation and reduction of goods and services tax (GST) rates, together with benign inflation, will help sustain retail credit demand across asset classes."

However, risk calibration and funding access dynamics will impact growth outlooks differently across entities and asset segments, it said.

The unsecured MSME business loans, which comprise nearly 6% of NBFC AUM, have seen an increase in delinquencies amidst higher borrower leverage and adjacencies with the microfinance customer segment, Crisil Ratings said.

It mentioned that the segment's AUM is likely to slow to 13-14% from the highs of 31% seen in the previous two fiscals.

In unsecured loans, the report said the growth trends will vary based on sub-segments--personal loans and business loans.

From a high of 37% in fiscal 2024, growth in personal loans (Rs 11% of NBFC AUM) fell sharply to 18% last fiscal as players undertook strategic recalibration of target customer segments on the back of regulatory measures.

With improved performance of newer originations, growth of personal loans will improve to 22-25% over this fiscal and the next, it noted.

Further, on the gold loan segment, that comprise nearly Rs 6% of AUM, the report said it should continue to outperform other asset classes, driven by increased formalisation, with a shift from unorganised players, high gold prices, and NBFCs' interest in entering the gold finance market.

Crisil Ratings highlighted that from a liabilities' perspective, access to bank funding remains an important determinant for growth for NBFCs, especially for mid-sized players as compared with larger entities.

Speaking on bank lending to NBFCs, Ajit Velonie, Senior Director, Crisil Ratings, said, "Despite the rollback in risk weights from April 2025, bank lending to NBFCs is yet to see a pick-up and stood at Rs 13.8 lakh crore as of September 2025, just marginally above the levels seen a year back."

"While larger NBFCs have accessed other funding avenues such as the debt capital market and external commercial borrowings, others have fewer alternatives. Hence, the extent of rebound in bank funding will influence the growth outlook for these NBFCs," he highlighted. (ANI)

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