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Rating agency ICRA Ratings in its latest report has said that the asset under management (AUM) of non-banking financial companies (retail) is expected to grow 5-7 per cent in fiscal 2022 and 8-10 per cent in fiscal 2023. It said housing finance companies (HFCs) are likely to see their AUM expanding by 8-10 per cent in the current fiscal and 9-11 per cent in the next financial year. 

According to the report, within the NBFC-retail segment, personal credit, microfinance and gold loans are likely to be the primary growth drivers as other traditional asset segments-vehicle finance and business credit are still facing headwinds because of supply constraints and asset quality concerns. However, it said NBFC-wholesale AUM will continue to shrink in the current fiscal and stabilise in FY2023. It noted that while the disbursement and AUM trends have revived in Q2 FY2022 and Q3 FY2022, the trend is likely to continue in Q4 of FY2022 as impact of the third wave of the pandemic was limited.

The agency further said the disbursement growth will have to remain healthier for a sustained AUM growth. In line with the trend seen over the past two years, it said liquidity for the sector has remained adequate, with entities typically maintaining a coverage of their next three-month repayments. Also, lower AUM growth in FY2022 warranted limited incremental funding requirement as compared with previously envisaged levels. It expects the NBFC and HFC return on managed assets (RoMA) to reach near COVID-19 levels of 2.7-2.9 per cent and 1.8-2 per cent in FY2023.