Loans disbursed by non-banking financial companies (NBFCs) have remained under stress, with a recent portfolio shift to higher-risk unsecured credit, according to a TransUnion CIBIL Report.
There was a general improvement in delinquency rates till the quarter ended June but it did reveal performance deterioration for smaller value personal loans and automobile loans. Breaking down NBFC delinquencies further by loan size, TransUnion CIBIL’s analysis found an increase in delinquency for NBFC loans smaller than Rs 50,000, which constitute almost 80 per cent of the segment’s personal loan origination.
NBFCs have played a key role in consumer credit growth over recent years. They saw slower growth in the September quarter (the second one or Q2 of the financial year) as compared to banks. NBFCs continue to face funding challenges and have been shifting their origination strategy away from larger-value loans to smaller-ticket personal loans.