NBFCs - Risk Management, Regulatory Compliance More Important Than Ever: Motilal Oswal

Motilal Oswal Report

We attended an NBFC industry seminar hosted by CRISIL Ratings, featuring various industry experts who shared their insights on the overall NBFC sector, mortgage financiers, vehicle financiers and diversified/specialized lenders. Here are the key takeaways from the seminar:

1. NBFCs’ AUM growth could moderate to ~15%-17% in FY25 and FY26 from stronger growth of ~23% in FY24 due to an expected slowdown in unsecured personal and microfinance loans, among other factors;

2. Technology will play a crucial role in the current evolving regulatory environment;

3. Potential/expected rate cuts in India will have differential impact on NBFCs basis their relative share of fixed- and floating-rate advances and liabilities,

4. For NBFCs, while it is important to manage the risk on the assets side, it is even more important to manage liability risk;

5. Asset quality will remain range-bound for most of the segments; however, unsecured personal loans and MFI could continue to see volatility.

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