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Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that non-bank finance companies (including housing finance companies) are likely to face increased funding challenges in FY24, which is likely to impact their growth aspirations.

As per the report, funding is expected to become more expensive and restricted as lenders realign their pricing as well as funds allocation, factoring in their own increased cost of funds and constraints of their balance sheets. It noted that banks and capital markets together account for most of the funding sources for NBFCs (9MFY23: 73%).

Ind-Ra further said that banks are increasingly facing challenges with many of them approaching near their internal exposure limits, largely public sector banks. While banks’ boards may revisit their exposure limits in FY24, the loan growth in the non-bank segment and high sectoral concentration are likely to weigh on their minds.