The growth in assets under management (AUM) of non-banking financial companies (NBFCs) is set to moderate to 15-17 per cent in the current and next fiscals, a decline of 600-800 basis points (bps) from the 23 per cent growth seen in the last fiscal, as they navigate evolving operating and regulatory environments and recalibrate strategies, CRISIL Ratings said in a webinar today.

Krishnan Sitaraman, Chief Ratings Officer, CRISIL Ratings, says, “The recent regulatory pronouncements have brought to the fore the criticality of compliance — both in letter and spirit — and operational risk management.

Additionally, asset quality metrics are weakening in the past few quarters in some segments. This has necessitated a recalibration of growth strategies, especially in unsecured loans and microfinance.”

AUM growth could moderate due to rising household indebtedness and associated asset quality risks, especially in the unsecured loan segment.

Regulatory compliance requirements have also intensified recently, with a sharper focus on customer protection, pricing disclosures, and operational compliance, necessitating process recalibration.

Additionally, access to diversified funding sources, a crucial determinant of growth, especially amid the slowdown in bank lending to NBFCs, will vary across NBFCs.

businessline reported in October that the Reserve Bank of India has asked NBFCs, particularly those in the upper layer, to maintain at least 25 percent of their overall liabilities from capital markets.

“AUM growth of NBFCs in the two largest traditional segments — home and vehicle loans (~45% per cent of NBFC AUM) — will continue to be driven by fundamentals with limited impact of the above factors,” the report said. 

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