NBFC-MFI`s AUM likely to grow by up to 30% in FY24: Crisil
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Domestic rating agency Crisil in its latest report has said that Non-Bank Finance Companies-Microfinance Institutions’ (NBFC-MFI) Assets Under Management (AUM) are expected to grow by up to 30 per cent in the current financial year (FY24).
In a report, Crisil said the NBFC-MFI segment's AUM stood at Rs 1.3 lakh crore at the end of March 2023, and the segment has the highest share in the overall microlending universe which also consists of small finance banks, universal banks and other lenders. The overall AUM is expected to have touched Rs 3.4 lakh crore for the entire microlending universe and the growth in NBFC-MFIs has outpaced the same of other lenders. The growth in the NBFC-MFIs segment has come on the back of pent-up demand for credit and increase in ticket-size of disbursements.
Rating agency further said NBFC-MFIs have been cleaning up their pandemic-impacted loan books through write-offs and sale to asset reconstruction companies through last fiscal. This, coupled with lower slippages in recent originations has helped bring down their stressed assets level. Profitability, which is measured by return on managed assets, is expected to exceed 3 per cent in FY24, versus 1 per cent in FY21 and FY22, and between 1.5-2 per cent in fiscal 2023. With all this in place, the agency expects the credit profiles of micro-financiers to strengthen this fiscal.
