Mumbai: The non-banking financial company (NBFC) sector, which has been affected by a series of default by IL&FS, reported a sharp jump in gross non-performing assets ratio to 6.1 percent in FY19 from 5.3 percent in FY18, says an RBI report.
The net NPA ratio saw a marginal uptick at 3.4 percent in the fiscal ended March 2019, compared to 3.3 percent in FY18.
In its report on Trends and Progress 2018-19, the Reserve Bank of India said in FY20, up to September, asset quality of the sector showed deterioration with a slight increase in gross non-performing asset (GNPA) ratio.
However, it did not disclose the September NPA ratio.
The report said in 2018-19, GNPA ratio of non-deposit NBFCs deteriorated to 6.1 percent from 5.3 percent in FY18.
The net NPA ratio for NBFCs-ND-SI edged up marginally, reflecting the maintenance of adequate buffers, especially by microfinance institutions (MFIs) and Infrastructure Finance Companies (IFC).
NBFCs-MFI, however, reported a significant improvement in the GNPA ratio at 4.3 percent in FY19 compared to 7.5 percent.
"The improvement in the GNPA ratio of the NBFCs-MFI may be attributed to write-offs of aging loans," the report said.
In the case of deposit-taking NBFCs, gross NPAs declined to 5.3 percent in FY19 to 6.1 per cent in FY18.
The report said although the NBFC sector grew in size to Rs 30.9 lakh crore in FY19 from Rs 26.2 lakh crore in FY18, the pace of expansion was lower than in FY18, mainly due to rating downgrades and liquidity stress in a few large NBFCs in the aftermath of the IL&FS event.
Despite liquidity stress faced by the sector, there was an expansion in the asset size of IFCs.
Balance-sheets of NBFCs-MFI also expanded on the back of strong growth in their loans and advances, especially to the agriculture sector.
In 2018-19, credit extended by NBFCs continued to grow, the report said adding, "industry is the largest recipient of credit provided by the NBFC sector, followed by retail loans and services".
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Updated Date: Dec 25, 2019 08:52:24 IST