HomeIndiaRating agency ICRA lowers MFI asset growth estimate to 12-14% for FY22

Rating agency ICRA lowers MFI asset growth estimate to 12-14% for FY22



Reflecting the effect of the second wave of Covid-19 infection, rating agency has revised downwards the estimated growth in assets of NBFC-to 12-14 per cent in Fy22 from earlier projection of 22-25 per cent.


However, the growth is expected to improve to 18-22 per cent in FY2023, though the recent rise in Covid-19 infections (third wave) poses risk to the estimates. The long-term outlook for non-banking financial companies-institutions (NBFC-MFIs) is expected to remain robust. This would be driven by





Disbursements are expected to have continued in Q3 FY2022, post revival in Q2 FY2022.


Sachin Sachdeva, Vice President and Sector Head, Financial Sector Ratings, said the disruptions caused by the second wave impacted the growth of the industry in H1FY22. The wave greatly hindered the movement of people and the entities focused on collections instead of disbursements.


The Assets Under Management (AUM) of NBFC-witnessed an annualised growth of five per cent in H1 FY2022 to Rs 82,749 crore as on September 30, 2021 from Rs 80,549 crore as on March 31, 2021 (Rs 73,792 crore as on March 31, 2020).


The asset quality metrics weakened quite sharply in H1 FY2022 because of the localised lockdowns imposed by various states/union territories (UTs) on account of the second wave, which impacted the borrowers’ cash flows and hence the collection efficiency (CE).


With the gradual opening of the economy, activities resumed in Q2 FY2022 and collections also bounced back to March 2021 level.


The delinquencies had risen significantly in May-June 2021, however, with incremental restructuring and some recovery in CE the reported delinquencies declined by September 30, 2021, though the same remained elevated as compared to March 2021 level.


In addition, NBFC-had around 10.7 per cent of its AUM restructured as on September 30, 2021, performance of which remains monitorable.

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