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Rating agency Icra today said difficulties being experienced in commercial vehicle, construction equipment and gold loans will result in non-bank lenders' credit growth from retail segment to halve in FY14 to 8-10%.
"Overall, ICRA expects NBFCs to report an 8-10% growth in retail credit in FY2014, as against the 19% achieved in FY2013," it said in a note.
According to the rating agency's estimate, the credit by the sector has grown by only 5% during the first nine months of the fiscal ending December 31, 2013 as against the 15% which was achieved during the same period last year.
The dip in credit growth can be attributed to "the significant slowdown being caused mainly by de-growth in the commercial vehicle (CV), construction equipment (CE), and gold loan segments", it said.
It can be noted that the dip in economic growth -- experts are suspecting if we would even get to the 5% mark for FY14 -- coupled with government's inability to kick start projects and judicial interventions like the ban on mining, have resulted in difficulties for the the CV and CE sectors.
Gold loan demand has been constrained due to regulatory policies of having lower loan to value ratios for a better part of the fiscal, which has now been raised.
The agency also expressed concern on the asset quality front for the NBFCs, saying the 90 days past due delinquencies on retail loans -- the trigger for classifying an asset as a NPA at a bank -- have moved up to 4.3% in December 2013 from the 3.5% in March 2013.
The more than 180 days past due delinquencies, when a NBFC classifies an asset as a NPA, have also moved up to 1.7% in December from the 1.3% in March, it said.
Following the RBI coming out with regulations over restructured assets for the NBFCs, Icra said the overall restructured advances of retail-focused NBFCs are expected to be in the range of 1.25-1.50%, which is the same level as private sector lenders.
