The trend of market share losses for non-banking finance compes (NBFCs) to banks is continuing in housing and private auto segments, Emkay Global Financial Services said on Monday.
This is largely due to lower interest rates and longer loan tenures by banks. Meanwhile, NBFCs continue to bet on the under-banked and new-to-credit segments to manage growth momentum while also focusing on specific product segments like used vehicle finance, affordable housing and low-ticket MSME loans.
Emkay said the recent discussions with various NBFCs management and industry experts point to a surge in credit demand across sectors and geographies. New housing loans especially in the affordable category, used vehicle loans and MSME loans are seeing significant momentum.
This is followed by autos and two-wheelers while the cautious stance stays regarding unsecured loans. Demand for medium and heavy commercial vehicles besides tractors is also witnessing initial signs of a quick rebound. The introduction of the scrappage policy is expected to accelerate used vehicle demand further.
Emkay said the Reserve Bank of India (RBI) increasing its vigilance over NBFCs and restricting dividend payouts will result in enhancing their governance structures and bringing more transparency. It will also lead to an improvement in the cost of funds and credit costs.
For banks, the shift toward marginal cost of funds-based landing rate (MCLR)-linked borrowing has also aided in trimming the cost of funds.
( With inputs from ANI )
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