Growing infections and the economic impact of the second wave of the Covid 19 are likely to push Non Performing Assets (NPA) of non-banking finance companies (NBFCs) by 50 to 100 basis points, halting the recovery in the sector witnessed in the last quarter of the fiscal, rating agency ICRA said.
Nearly a third of loans by NBFCs are in risky segments, and the already elevated non-performing assets ratio for such lenders are expected to rise by up to 1 percent in FY22 due to the impact of the second COVID-19 wave, a domestic rating agency said.
Estimate on the overall assets under management (AUM) growth for non-bank lenders has been revised down to 7-9 percent as against 8-10 percent earlier by ICRA because of the setback in disbursements in the first quarter of the fiscal, impacted by the second wave. "Entities would also be faced with increased asset quality pressures as prolonged stress in the operating environment would push the gross stage3/NPAs by about 0.50-1 percent in the current fiscal; it increased by about 0.40-50 percent during the last fiscal," the agency's vice president A M Karthik said.
About 30 percent of the nonbank exposure is deemed to be in the risky segments like real estate, personal credit, microfinance, unsecured SME and segments of commercial vehicle and passenger vehicle financing, which were more severely affected by the pandemic, he added.
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