Bank credit to NBFCs increases 10% to Rs 10.5 lakh crore in FY22: Care Ratings
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Care Ratings in its latest report has said that bank credit to non-banking financial companies (NBFCs) grew in double digit in FY22 with outstanding bank credit to them rising by 10.4 per cent to Rs 10.5 lakh crore on the back of improvement in overall economic activities and banks' renewed focus on the NBFC sector following improvement in their balance sheets.
It stated in absolute terms, NBFCs expanded by Rs 99,000 crore in FY22, from FY21. The number does not include liquidity given by banks to them through securitization route (direct assignment and pass-through certificates) and also banks' investments in NBFCs' debt instruments. Meanwhile, mutual funds' debt exposure through commercial papers (CPs) and corporate bonds, to NBFCs rose 14.3 per cent to Rs 1.7 lakh crore in FY22 as NBFCs issued more CPs to fund IPOs and as they shifted from long-term to short-term investments on expectation of hike in interest rates.
In absolute terms, it expanded by Rs 21,000 crore. Outstanding investments in CPs of NBFCs grew 25 per cent to Rs 73,000 crore in FY22 as the year was the best in the IPO history and NBFCs issued CPs worth Rs 15,000 crore to fund IPOs. The percentage share of funds deployed by mutual funds in CPs of NBFCs in FY22 stood at 4.4 per cent of debt assets under management (AUMs), up from 3.6 per cent in FY21.
