India’s Leading BFSI and FinTech Companies 2021

24 0 1 2 3 4 5 6 7 2015 2016 2017 2018 2019 2020 GNPA Ra ti o, NNPA Ratio GNPA Ratio NNPA Ratio In fiscal 2020, the GNPA ratio of NBFC-ND-SI deteriorated, largely due to worsening asset quality of NBFCs-ICC. On the other hand, IFCs reported an improvement in their GNPA ratio due to resolution of stressed assets of a prominent government NBFC. NBFCs-MFI also clocked improvement in asset quality, which reflects the good inherent health of MFI loan portfolio. The NNPA ratio of NBFCs-ND-SI remained stable during FY20 amid improved provisions while ICCs showed an increase in their NNPA ratios. IFCs and NBFC-MFIs recorded declining NNPA ratios during the year with the latter reporting no NNPAs at the end of the fiscal 2020. Traditionally, industry has been the largest recipient of NBFC lending and also accounts for the highest number of stressed assets. In FY20, stressed assets in the services sector, particularly commercial real estate, also shot up. Going forward, in view of the economic downturn caused due to the pandemic, asset quality of NBFCs may further deteriorate even in the retail loans segment. The six-month moratorium on loan repayments announced by the RBI followed by a one-time debt restructuring plan are expected to curtail a rise in the NPAs and mitigate the impact of the pandemic on the financial performance. Sectoral Credit Split Industry continues to be the largest recipient of credit extended by NBFCs followed by retail loans and services. Credit extended to all sectors declined sharply in FY20, except in the case of retail loans, which expanded albeit at a slower pace in FY20. On the other hand, agriculture, industry and services posted absolute declines. In the retail loans segment, housing loans and vehicle loans contributed to the growth. Profitability of NBFCs Despite deteriorating asset quality and increased risk aversion, NBFCs have been reporting healthy profitability ratios in the recent past given their unique business model. In FY19, profitability declined on the heels of the IL&FS event, reflecting the stress in the sector. During fiscal 2020, the profitability indicators of NBFCs – Return on Assets (RoA), Return on Equity (RoE) showed improvement, but that was largely due to the low base of FY19 caused by the IL&FS episode. Both the profitability indicators moderated for NBFCs-D while net interest margin remained stable. 53.6 15.8 2.6 23.3 4.72 Sectoral Distribution of Credit (% share) FY20 Industry Services Agriculture & Allied Services Retail Loans Other Non-Food Credit Dun & Bradstreet