{"id":26072,"date":"2023-01-03T13:00:36","date_gmt":"2023-01-03T07:30:36","guid":{"rendered":"https:\/\/flattrade.in\/kosh\/?p=26072"},"modified":"2023-01-03T13:11:55","modified_gmt":"2023-01-03T07:41:55","slug":"nbfcs-credit-grows-13-1-in-h1fy23-asset-quality-improves-says-careedge-ratings","status":"publish","type":"post","link":"https:\/\/flattrade.in\/kosh\/nbfcs-credit-grows-13-1-in-h1fy23-asset-quality-improves-says-careedge-ratings\/","title":{"rendered":"NBFCs credit grows 13.1% in H1FY23; asset quality improves, says CareEdge Ratings"},"content":{"rendered":"\t\t
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Non-Banking Finance Companies (NBFCs) in India has witnessed an aggregate credit growth of 13.1% to Rs 31.5 lakh crore in H1FY23, according to CareEdge Ratings. The report said that there has been a shift in the segmental distribution of credit with a tilt towards retail and a fall in the industry.<\/p>\n

In the last four and half years since 2019, loans to industry lost market share from 40.6% in FY19 to 37.5% in H1FY23, but continued to be the largest segment, followed by retail loans at 29.5%, services at 14.7% and agriculture at 1.7%.<\/p>\n

There are over 9,000 NBFCs which are currently registered with the RBI, and NBFCs are classified into four layers namely Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer (NBFC-TL) based on their size, activity, and perceived riskiness. Recently, sixteen entities have been identified for categorisation as NBFC-UL under the Scale Based Regulation framework.<\/p>\n

According to RBI’s Financial stability Report, NBFC-UL group recorded higher credit growth (y-o-y) of 17.2% and a better GNPA ratio of 4.2% as of September 2022 than the overall NBFC sector. Further, the capital adequacy of NBFCs which is measured by Capital to Risk Weighted Assets Ratio continued to be robust as of September 2022. The marginal decline was attributed to rising lending activities.<\/p>\n

CareEdge Ratings noted that NBFC \u2013 Investment and Credit Company (NBFC-ICC) and NBFC \u2013 Infrastructure Finance Company (NBFC-IFC) continued to be the largest segments and account for over 90% size of all NBFCs. Further, on examination, the asset quality numbers across select NBFC categories, all the categories of NBFCs witnessed an improvement in their GNPA. NBFC-IFC witnessed an increase in the Special Mention Accounts -2 numbers, while stress has reduced in NBFC- ICC.<\/p>\n

Special Mention Account (SMA) are those accounts that gives a hint that an advance given is of bad asset quality once the loan account is overdue or before its being identified as NPA. The Special Mention Accounts are usually categorized in terms of duration. In the case of SMA -1, the overdue period is between 31 to 60 days, while an overdue between 61 to 90 days will make an asset SMA -2.<\/p>\n

Meanwhile, NBFCs have been the largest net borrowers of funds from the financial system. NBFCs owed close to 59% (57% in FY22) to Banks followed by 16.2% (18.4% in FY22) to MFs and 17.4% (17.6% in FY22) to insurance companies. The share of Banks has continued to rise as yields hardened in the bond market. Overall, NBFCs and Housing Finance Companies have shown significant growth in Q1FY23 which is likely to sustain for the rest of the year with improved access to equity and bank funding, CareEdge Ratings said. The share of Banks as a lender to NBFCs has continued to increase as yields hardened in the bond market.<\/p>\n

Moreover, CareEdge Rating stated that financial entities have generally emerged resiliently from the pandemic and are expanding their business as the Indian economy recovers. The credit outlook is expected to be stable for Banks and NBFCs with scaling up of operations. Macro stress tests indicate that under the baseline scenario, the Gross Non Performing Asset (GNPA) of NBFCs reduces to 5.8%, while under the medium risk and high risk, the GNPA ratio rises to 6.9% and 8%, respectively.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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\n\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\tOpen a Free Demat Account<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"Non-Banking Finance Companies (NBFCs) in India has witnessed an aggregate credit growth of 13.1% to Rs 31.5 lakh…","protected":false},"author":5,"featured_media":26077,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"csco_display_header_overlay":false,"csco_singular_sidebar":"","csco_page_header_type":"","csco_page_load_nextpost":"","csco_post_video_location":[],"csco_post_video_location_hash":"","csco_post_video_url":"","csco_post_video_bg_start_time":0,"csco_post_video_bg_end_time":0,"csco_post_video_bg_volume":false,"footnotes":""},"categories":[65],"tags":[657,46,43,95,656,148,655,78,48,659,26,24,84],"class_list":{"0":"post-26072","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-industry","8":"tag-lending","9":"tag-market-news","10":"tag-market-update","11":"tag-markets","12":"tag-money","13":"tag-nbfc","14":"tag-nbfcs","15":"tag-nifty","16":"tag-nifty-today","17":"tag-npa","18":"tag-nse","19":"tag-share-market","20":"tag-stocks","21":"cs-entry","22":"cs-video-wrap"},"yoast_head":"\nNBFCs credit grows 13.1% in H1FY23; 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