The competitive pressure is expected to remain high, which will affect the margins, despite the reduction in the cost of the funds.
It is likely that non-banking financial companies (NBFC) see the deceleration in credit growth to 13-15 percent in fiscal year 200 in general, it is expected that the outstanding NBFCS credit will grow from approximately approximately ₹ 52 Lakh Crore in December 2024 to more than ₹ 60 Lakh Crore in the 2016 fiscal year.
Retail loans, which constitute 58 percent of the NBFCS credit, will also see a growth rate to 16-18 percent in fiscal year 2015-FY26 from 23 % growth FY23-FY24. The lower growth is expected due to the high base created in the expansion after the COVID of this segment, in the midst of the concerns of borrowing on the liver, which has impacted the quality of the loan in some assets of assets within this space.
“Some assets of assets, largely guaranteed loans, namely, microfinance, personal loans, credit cards and non -guaranteed commercial loans (~ 28 percent of NBFC retail credit in December 2024) have already been impacted.
In addition, the competitive pressure is expected to remain high, which will affect the margins, despite the reduction in the cost of the funds.
Banks outlook stable
According to Moody’s qualifications, relatively low and more diversified exports of India to the United States are expected to limit the credit impact on their banks. The imposition of rates by the United States has shocked financial markets, he says, increasing the risk of a global economic recession. Continuous uncertainty can affect business planning, delay investment and reduce consumer confidence, which can cause deterioration in global credit conditions.
However, Moody’s perspective for India’s banking system remains stable, since he expects a favorable operational environment for banks, driven by government capital spending, tax cuts for average income groups and monetary flexibility to boost consumption.
“It is projected that the quality of the assets of the banks is moderately deteriorated after substantial improvements in recent years, due to an increase in stress in non -guaranteed retail loans, microfinance loans and loans for small businesses,” he said.
Moody’s hopes that the profitability of the lenders will be lower than the FY25, but said that it remains adequate since it is likely that the margins of net interest (NIM) will be gradual. Banks will maintain a solid capitalization, backed by the generation of internal capital that maintains the rate of asset growth and easy access to a deep market of national capital. The central government is also expected to provide strong support for banks in times of necessity, he said.
Posted on April 23, 2025
