NBFC profitability to remain stable amid 85-105 bps in funding cost: Crisil

Rs 15 trn debt as on March 31 is due for repricing in FY23 owing to interest reset or maturity. Another Rs 3 trn of incremental debt is likely to be raised to support growth in lending

The hardening of interest rates is likely to raise the cost of funds for finance companies by 85-105 basis points (bps) as their debt, amounting to Rs 18 trillion, gets repriced in the current financial year, according to Crisil Ratings.

However, overall profitability of non-banking finance Companies (NBFCs) is likely to remain steady. cushioned by a reduction in credit costs. Credit costs, which have been rising the past few years, should dip this fiscal as most NBFCs hold substantial provisioning buffers. This should offset some of the impact of higher interest rates on profitability.

An analysis of NBFCs under Crisil’s