RBI Initiatives Redefine Growth Trajectory for Non-Bank Lenders

The RBI's regulatory changes and asset quality trends are expected to slow down the asset under management growth of non-bank lenders to 15-17% in FY25 and FY26, according to Crisil. Despite slower growth rates than FY24, this remains higher than the previous decade's 14%. Compliance and recalibration in strategies are essential due to increased regulatory actions.

The Reserve Bank of India's regulatory policies are set to decelerate non-bank lenders' asset under management growth to 15-17% in the current and next fiscal years, a marked slowdown from FY24's 23% growth, Crisil reported Monday. However, this growth will still outpace last decade's 14% average.

Non-bank financial companies (NBFCs) will shift towards sustainable growth strategies influenced by the regulatory environment and asset quality trends. The RBI heightened risk weights for banks' lending to NBFCs and unsecured loans, sparking a strategic recalibration within the sector.

According to Crisil's leadership, compliance has become critical, especially in segments like microfinance and unsecured lending, which are witnessing increased debts. This has prompted NBFCs to diversify their funding sources amid a bank lending slowdown and pivot towards alternatives like commercial paper and bonds. Securitisation volumes are expected to peak, reflecting the evolving financial landscape.

(With inputs from agencies.)