Non-banking Financial Companies AUM to grow 18-19% as vehicle finance, home loans stay robust: Crisil

New Delhi [India], November 24 (ANI): The non-banking financial companies (NBFCs) assets under management (AUM) for the vehicle finance and home loans, that comprise nearly 44% of the overall NBFC AUM, is set to grow at 18-19%, noted Crisil Ratings in a report on Monday.

It highlighted that the recent Goods and Services Tax (GST) cuts have given a fillip to unit sales across vehicle categories, particularly cars, and this momentum is likely to continue with a steady growth of 16-17% over this fiscal and the next.

Additionally, increasing preference for premium vehicles among buyers and focus on used-vehicle financing will support AUM growth in the segment even though competition with banks remains strong in new vehicles, it said.

In home loans, which also comprise of nearly 22% of NBFC AUM, the growth is estimated at 12-13% over the two fiscals, down from Rs 14% last fiscal, said the report.

While the long-term demand for end-user housing remains strong, growth will be marginally slower due to intense competition, especially from public sector banks, in the prime home loan market.

Further, expected moderation in residential real estate sales growth (in value terms) in the top seven cities could affect disbursement of new home loans, Crisil said.

Speaking on the development, Krishnan Sitaraman, Chief Ratings Officer, Crisil Ratings, said, "Vehicle finance and home loans will see steady growth amid intensifying competition. However, exercising due caution on heightened customer leverage, NBFCs will adopt risk-calibrated growth especially in the MSME and unsecured loan segments."

The report has mentioned that the overall AUM of 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. (ANI)

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