Correct Answer : 6.6%
Moody’s Ratings predicts a 6.6% expansion for the Indian economy in the fiscal year ending March 2025 (FY25). This growth trajectory is anticipated to fuel strong credit demand, particularly benefiting the Non-Banking Financial Companies (NBFCs), despite challenges posed by rising funding costs.
Economic Growth Projection :
Moody’s anticipates India’s
GDP to grow by
6.6% in FY25, followed by a
6.2% growth in the subsequent year. This projection, albeit slightly lower than some other estimates, reflects the agency’s assessment of the economic landscape.
Impact on NBFC Sector :
Strong economic growth is expected to drive robust loan growth in the
NBFC sector, offsetting the effects of increasing funding costs on profitability. The sector’s resilience is further bolstered by favorable economic conditions, which are projected to help maintain asset quality amidst rising interest rates and customer debt burdens.
Loan Growth and Diversification :
Aggregate loan growth in
NBFCs surged to
20.8% year-on-year in
September 2023, primarily fueled by retail loan demand. Looking ahead, Moody’s anticipates a continued growth trajectory of about
15% over the
next 12-18 months, driven by diverse lending activities including infrastructure financing and support for small and medium-sized enterprises.
Challenges and Mitigation :
While growth in unsecured retail loans may moderate following regulatory adjustments, NBFCs are poised to maintain their pivotal role in addressing credit needs across India’s economy. The top 20 NBFCs, with established market positions and diversified loan portfolios, are expected to navigate challenges with relative stability, supported by government or corporate ownership which bolsters funding resilience during turbulent periods.
Published On : May 15, 2024
Category : Indian Economy