NBFCs to witness an asset growth of 11% to 12% in FY23 – CRISIL Report
According to a CRISIL report released on Monday, non-bank lenders’ asset growth is expected to jump to a four-year high of 11%-12% this fiscal. The NBFC segment has witnessed three consecutive years of constrained asset growth due to the COVID-19 pandemic, with growth in Assets Under Management (AUM) coming in at 2-4% in FY20 and FY21 and 5% in FY22.
However, deputy chief ratings officer of CRISIL Krishnan Sitaraman said that even as the asset growth jumps to double digits, it will still be lower than the pre-pandemic levels which witnessed a 20% CAGR during the three years to FY19. Intense competition from banks and the rising interest rate scenario are expected to limit the competitiveness of NBFCs in certain segments, leading them to focus on higher-yield segments for growth.
The growth this fiscal year is expected to be led by vehicle loans, unsecured consumer loans and loan against property (LAP) riding on better macroeconomic conditions.
Vehicle finance, which constitutes nearly half of the assets for NBFCs, will grow at 11%-13% in FY23, as against 3%-4% in FY22 and FY21. Within this segment, used vehicle financing, with its higher yields, will see higher growth and is expected to drive the NBFC volume in vehicle finance. Gold loans are expected to attain their steady state growth rate of 10%-12% supported by demand from micro enterprises and individuals – to fund working capital and personal requirements, respectively.
Rising credit card and UPI transactions – An indicator of economic recovery
According to many market experts the rising credit card and UPI payments indicate an increase in consumption amid recovery in economic activities with the ebbing impact of Covid pandemic. As per the RBI’s monthly data, Unified Payments Interface (UPI) transactions increased from Rs 9.83 lakh crore in April this year to Rs 10.73 lakh crore in August.
Similarly, credit card spends through PoS (Point of Sale) terminals increased from Rs 29,988 crore in April this year to Rs 32,383 crore in August. The credit card spending on e-commerce platforms, which was valued at Rs 51,375 crore in April, rose to Rs 55,264 crore in August.
Experts and market players are of the view that the increase in volume and value of digital transactions bode well for the economy. It also indicates that consumers are increasingly becoming familiar with different modes of digital payments, and giving up their inhibitions. The government’s push to digital transactions, rising income, increasing use of smartphones and improvement in internet connectivity are aiding the growth of online payments. Besides, more and more merchants are deploying digital payment infrastructure.
Card Tokenization to be effective from October 1st
The Reserve Bank of India (RBI) is ready to bring its card-on-file tokenisation norms into effect from October 1 2022, after various complaints were filed regarding the misuse of debit or credit cards.Several people were cheated in the last few years by cyber frauds because they have stored their card data on the merchants website for future payments.
The card-on-file (CoF) tokenisation norms will be applied to credit and debit card information. The new rule will replace actual card details with an alternative code “token”, which shall be further used for future transactions. To obtain a token, the cardholder needs to go through a one-time registration process while using their cards at any e-commerce platform. As they enter their card details, it gives consent to create a token which is then validated by way of authentication through an additional factor of authentication (AFA). A token is thereafter created which can be used for future transactions with the CVV number and OTP steps.
In another step towards easing regulations, Insurance Regulatory and Development Authority of India (IRDAI) has done away with the need to submit a separate proposal form for taking an annuity product from proceeds of National Pension Scheme (NPS).
Currently, retirees submit an exit form to NPS and a proposal form to insurers at the time of superannuation. The insurance sector regulator has also allowed insurance companies to take the annual life certificate through digital means.
Now, the exit form of NPS will be treated as a proposal form for purchasing annuity, thereby reducing the time and efforts of senior citizens as well as insurers.The changes rules will come into force with immediate effect.
