IGI Logo

Rating agency Crisil has said it expects stressed assets of non-banking financial companies (NBFCs) to touch Rs 1.5-1.8 lakh crore or 6-7.5% of the assets under management (AUM) by the end of the current financial year. However, reported gross non-performing assets would be limited due to the one-time Covid-19 restructuring window and the micro, small and medium enterprises (MSMEs) recast scheme offered by the Reserve Bank of India (RBI). Unlike previous crises, the pandemic has impacted almost all NBFC asset segments.

It mentioned operations of most of these lenders were curbed the most in the April-June quarter, when disbursements and collections were severely affected by the complete standstill in economic activity.  Krishnan Sitaraman-senior director, Crisil Ratings, said this fiscal has bought unprecedented challenges to the fore for NBFCs. Collection efficiencies, after deteriorating sharply, have now improved, but are still not at pre-pandemic levels. He added there is a marked increase in overdue amounts across certain segments and players.  Nevertheless, gold loans and home loans have been resilient, with the least impact among segments.

The big challenge this year will be the unsecured personal loans segment, where underlying stress has increased significantly with early-bucket delinquencies more than doubling for many NBFCs. For vehicle finance, however, Crisil expects the impact to be transitory, and collection efficiencies to continue improving over the next few quarters as economic activity improves. Unlike previous crises, the current challenges on account of Covid-19 impacted almost all NBFC asset segments. However, it said the restructuring schemes offered by the RBI will limit the reported gross non-performing assets