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Sharp rise in NBFCs’ non-home loan book

Monday, March 21st, 2011

Consumer finance and vehicle finance portfolios of retail non-banking finance companies (NBFCs), which grew 40 % in 2010-11, are likely to be equal to the total non-mortgage retail lending portfolio of banks (all retail lending apart from home loan) by March 2013, according to research and credit rating agency Crisil.

NBFC’s consumer finance and vehicle finance portfolio – at present hovering around Rs 2 lakh crore – is expected to grow at more 50 % in 2011-13.

NBFC’s loan outstanding on consumer finance and vehicle finance is expected to jump to Rs 4,00,000 crore, according to Crisil’s research, and equal banks’ non-home loan portfolio. Crisil cites growing presence of NBFCs in the semi urban and rural areas where the demand for retail finance is high.

“Whether it was truck financing or used truck financing, gold loans, the NBFCs came with the product line and the banks followed with similar offerings,” said Roopa Kudva, CEO and MD, Crisil.

The non-housing retail assets of banks have been subdued as aggressive private sector banks like ICICI Bank have stopped two-wheeler financing, had put brakes on unsecured lending and now the bank provides personal loans only to in-house customers.

But the NBFCs have also been reducing their exposure to risky asset classes like personal loans two and three-wheeler loans and increased their exposures to secured lending like gold loans, loan against property.

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