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August 14, 2020

CRISIL Research NBFC Report 2020

The Covid-19 pandemic has exacerbated the woes of non-banking financial companies (NBFCs). The decline in non-bank credit growth, which started in the second half of fiscal 2019, continued through fiscal 2020, accentuated first by economic slowdown and then - more vigorously - by the pandemic. 

 

While the impact of economic slowdown was expected to be gradual, providing time to build some kind of defence, the impact of the pandemic has been immediate and debilitating.

 

The ramifications are being felt across the sector, though some segments have been impacted more severely than others. 

 

The Reserve Bank of India (RBI) has allowed lenders to extend moratorium on loans up to August 31, temporarily mitigating the hardship of borrowers. However, in the absence of any such moratorium on non-banks' capital market borrowings, ensuring adequate liquidity to meet repayments coming up in the near term has become the primary challenge for most non-banks.

 

Another challenge is to ensure asset quality remains under control, through steps such as maintaining close contact with borrowers and supporting them through this unprecedented crisis.

 

It is clear that NBFCs will need to recalibrate their strategies in order to deal with changing business scenario post pandemic. 

 

Several questions emerge in the context. How would credit growth of the sector be impacted? When will the liquidity situation improve? Will the measures taken by the government and RBI improve non-banks’ access to funds? Can NBFCs achieve pre-2018 growth in the medium term, or will growth remain anaemic? Will the earnings growth trajectory be lower? How much capital will they need over the next 1-2 years? What will separate the winners from the losers? Where are the opportunities for growth?

 

Our latest report delves deep into all this and more, assessing each segment and offering insights on the road ahead.

 

The coverage includes:

 

  • Overall and segment-wise impact of the pandemic on NBFCs covering high risk segments
  • Detailed assessment of competitive scenario with banks and market share of NBFCs across segments
  • Impact of the initiatives and measures taken by the government and the Reserve Bank of India
  • Asset Quality: Restructuring measures, moratoriums and impact assessment across segments
  • Financial and operational benchmarks in various segments
  • Hues and Colors of NBFC funding and Liquidity
  • Advancements in digital platforms for lending
  • Coverage on evolving niche segments like personal loans
  • Profiles of over 200+ NBFCs, detailing key operational and financial parameters
  • Three quarterly updates

 

Product segments covered
Housing finance Low-cost housing finance
Infrastructure finance MSME finance - secured (including LAP) and unsecured
Auto finance Wholesale finance
Microfinance Gold loans
Consumer durables finance Construction equipment finance
Education loans Personal loans

 

Coverage

 

Overview For each of the segments covered
Outlook on yields and spreads in fiscals 2019 and 2020
Overall growth in the industry
Trend in short-term (commercial papers) and long-term issuances (non-convertible debentures)
Market share of NBFCs vs banks
Relative attractiveness of NBFC segments based on growth and profitability outlooks
Growth outlook for NBFCs
Competitive positioning of NBFCs across key segments
Profitability of NBFCs: Review & outlook
Outlook on asset quality in the NBFC industry 
Asset quality: Review & outlook
View on the borrowing mix of NBFCs 
Key growth drivers and challenges
Impact of major regulations on the industry