According to the credit rating agency Crisil, the loan delinquencies of non-banking financial companies (NBFCs) could rise 50-250 basis points (bps) this fiscal, depending on the segment of operation, because of the vulnerability in borrower cash flows.

The agency said this is a base-case estimate without factoring in a loan restructuring and the COVID-19 affliction curve. According to this estimate, as of March-end 2021, the projected delinquency in the home loan segment is 1.7-1.9% against estimated 1.1-1.3% as at March-end 2020; vehicle finance, including construction equipment ( 8.0-8.5% against 6.0-6.5%), loan against property (6.0-6.5% against 3.5-4.0%),unsecured SME loans (6.0-6.5% against 4.0-4.5%); and unsecured loans – consumer durable loans (4.0-4.5% against 2.0-2.5%).

Crisil observed that the rapid increase in COVID-19 afflictions and intermittent lockdowns would increase the asset quality challenges of NBFCs. It expects Assets under management (AUM) of NBFCs to de-grow this Fiscal. The agency underscored that the restructuring scheme for MSME borrowers and personal loans announced by the RBI may now limit the rise in NPAs in these segments.