Mumbai: Unsecured retail loans are likely to see slower growth of 20-30% compared to 45% last year, as non-banking financial companies (NBFCs) alter their strategies due to the recent regulatory measures issued by the Reserve Bank Of India, said Crisil Ratings.
“The recent regulatory measures are targeted at unsecured retail loans and do not impact the secured asset classes where growth is expected to be steady”, said Gurpreet Chhatwal, managing director at Crisil Ratings.
The RBI last week ordered banks and NBFCs to set aside more capital for consumer loans which will cost an estimated ₹84,000 crore in capital.
These new guidelines will make personal loans and credit cards more expensive as banks could increase rates to offset the higher cost of capital.
This may curb the growth in these segments. However, according to the rating firm, retail credit is driven by solid underlying macro and micro factors.
“Product diversification will be a key agenda for NBFCs whose core competence lies in the ability to reach, underwrite and cater to difficult-to-address customer segments. The diversification is expected to be through a mix of organic, inorganic and partnership routes,” said Krishnan Sitaraman, chief ratings officer at Crisil Ratings.
Unsecured loans contribute to 12-14% of the NBFC sector assets, while the remaining comes from secured assets, said Crisil.
NBFCs could diversify their product range given the rising costs of compliance.
