Big non-banking lenders in India are gaining trust and growing fast: Fitch Ratings
These institutions offer a wide range of financial services, and their credit ratings depend on how strong and stable their business models and finances are.
According to Fitch, large NBFIs with a proven track record are earning more trust from investors and lenders. This growing confidence is helping them stay ahead of smaller players in the sector.
By the end of September 2024, 17 major NBFIs tracked by Fitch had increased their share of the total loan market to 38 per cent, up from 30 per cent in March 2022. These leading lenders recorded an annual loan growth rate of 20 per cent during this period, much higher than the 9 per cent growth rate of the overall NBFI sector.
These big NBFIs have also become financially stronger. Their debt-to-equity ratio -- a measure of how much they borrow compared to their own funds -- dropped from 4.5 times in 2021 to 4.3 times by mid-financial year 2025.
This improvement came from raising more capital and keeping profits within the business, especially during the COVID-19 pandemic.
Lower debt levels help reduce the risk of financial trouble if loan repayments slow down. Fitch expects this trend to continue, with most NBFIs using their earnings to fund future growth rather than paying out large dividends.
Despite slower global economic growth, India's NBFI sector continues to expand. The sector includes a wide variety of companies offering different types of loans.
In cities, competition is tough for secured loans like home or car loans. But in rural areas, some NBFIs face less competition from banks. However, higher costs and greater credit risks in rural lending can affect profitability, depending on how well the loans are managed.
Fitch also highlights that the type of loans an NBFI focuses on plays a big role in its success. Those with deep experience and large operations in specific segments tend to have more stable and sustainable businesses.
Many NBFIs lend to non-prime customers -- people who may not get easy loans from banks -- which can help them earn higher margins, unless banks enter the same market.
Large NBFIs benefit from their size and strong market position. They usually have better access to funding, more control over pricing, and lower costs.
Those that lead in their lending areas are better able to manage risks and stay profitable, even during economic ups and downs. Companies backed by large corporate groups may also get easier access to funds and benefit from group support.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Indian Express
42 minutes ago
- New Indian Express
India, China in 'advanced' negotiations to resume direct flight services soon
NEW DELHI: India and China are in an "advanced stage" of negotiations to resume direct flight services between the two countries soon, people familiar with the matter said on Tuesday. The development comes ahead of Prime Minister Narendra Modi's likely visit to the Chinese city of Tianjin later this month to attend the annual summit of the Shanghai Cooperation Organisation (SCO). The move to resume the flight services between the two Asian giants also comes amid some strain in India's ties with the US over President Donald Trump slapping a 50 per cent tariff on Indian goods. New Delhi and Beijing are moving forward in a "positive" trajectory to restart trade through four border transit points, the people cited above said. Direct flight services between India and China were suspended in 2020 following the Covid-19 pandemic. The air connectivity remained suspended in view of the eastern Ladakh border row. The people cited above said the Indian and Chinese negotiators are looking at firming up a new air services agreement to resume the flight services. But if that is not materialised, then the two sides are set to resume the services using the existing air services framework. It is learnt that Air India has been sounded out about the possible resumption of flight services between India and China.
Time of India
an hour ago
- Time of India
Morbi businessman caught in web of losses, betrayal ends life
Rajkot:A 42-year-old businessman from Morbi died by suicide on Monday, allegedly after being trapped in a vicious web of financial losses and extortion, including threats of a false rape case by a woman he was in a relationship with. On the complaint lodged by deceased Ashok Padaliya's brother-in-law Prakash, the A-division police booked his partners - Amit Charola, Bhavesh Vidhja, Bipin Detroja, Manoj Sanandia, the woman Manisha Gohil and one Archit Mehta. Ashok left a suicide note naming the six. FIR states that around seven years ago, Ashok had leased a ceramics factory on Laghdirpur Road in Morbi for a monthly rent of Rs nine lakh. Amit, Bhavesh, Bipin, and Manoj joined as partners. Ashok was responsible for purchasing raw materials for the factory, while Bipin handled the accounts. Profits and losses were shared equally among the partners. When the business began incurring losses, Ashok was tasked with arranging funds. Before the Covid-19 pandemic, Ashok's father fell ill which required personal attention. Taking advantage of the situation, the four partners ordered unrelated raw material in Ashok's name from various traders and sold the factory's tile production. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Seniors are going crazy for these comfy, stylish, easy-on shoes Ultra-Comfortable Shoes Undo They equally divided the proceeds but not give Ashok his share. After Ashok's father's death, he discovered the factory was closed. Upon questioning his partners about the raw materials and production, they claimed that the factory had incurred huge losses due to the economic downturn, resulting in a debt of approximately Rs five crore, to be shared equally. Ashok requested his partners to pay their share of the debt so he could do the same, but they insisted he first cover their share, promising to repay him later. Consequently, Ashok sold his land and property to pay off Rs 4.37 crore. Despite repeated requests for repayment, his partners evaded him and eventually threatened him, leaving Ashok in constant distress. Around the same time, Ashok developed a romantic relationship with Manisha from Ahmedabad and frequently visited her. Meanwhile, Manisha came into contact with Archit from Gandhinagar, and the duo together extracted nearly Rs 70 lakh from him under various pretexts. The complaint states that Archit then threatened Ashok via WhatsApp calls from Manisha's phone, warning him that his family would be harmed if he did not pay more money. A few days before the incident, Ashok asked for Rs 2 lakh from his brother, stating that he would be forced to consume poison if he did not receive the money. Ashok told him that Manisha had called him to meet in Junagadh where she and Archit demanded Rs 25 lakh, threatening to implicate him in a rape case if he did not comply. On Aug 11, Ashok consumed poison and died during treatment in the Morbi govt hospital. Stay updated with the latest local news from your city on Times of India (TOI). Check upcoming bank holidays , public holidays , and current gold rates and silver prices in your area.
Mint
an hour ago
- Mint
Spirit Airlines sounds the alarm on its future ability to stay in business
NEW YORK (AP) — Just months after emerging from Chapter 11 bankruptcy, Spirit Airlines is warning about its future ability to stay in business. Spirit Aviation Holdings, the budget carrier's parent company, says it has 'substantial doubt' about its ability to continue as a going concern within the next year — which is accounting-speak for having the resources needed to sustain operations. In a quarterly report issued on Monday, Spirit pointed to 'adverse market conditions" that it's continued to face despite recent restructuring and other efforts to revamp offerings. That includes weak demand for domestic leisure travel, which Spirit said persisted in the second quarter of its fiscal year — among other challenges and 'uncertainties in its business operations' that the Florida-based company expects to continue 'for at least the remainder of 2025.' Known for its no-frills, low-cost flights on a fleet of bright yellow planes, Spirit has struggled to bounce back to profitability and boost resources to compete with rivals since the COVID-19 pandemic. Rising operation costs and mounting debt eventually led the company to seek bankruptcy protection in November. By the time of that Chapter 11 filing, the airline had lost more than $2.5 billion since the start of 2020. When Spirit emerged from bankruptcy protection in March, the company successfully restructured some of its looming debt obligations and secured new financing for future operations. Spirit has continued to make other cost-cutting efforts since — including plans to furlough about 270 pilots and downgrade some 140 captains to first officers in the coming months. Those furloughs and downgrades, both announced in July, are set to go into effect Oct. 1 and Nov. 1 to align with Spirit's 'projected flight volume for 2026,' the company noted in its quarterly report. They also follow previous furloughs and job cuts taken before the company's bankruptcy filing last year. Despite these and other cost-cutting efforts, Spirit on Monday stressed that it needs more liquidity. As a result, the company said it may also sell certain aircraft and real estate. Spirit's aircraft fleet is relatively young, which has made the airline an attractive takeover target over the years. But such buyout attempts from budget rivals like JetBlue and Frontier were unsuccessful both before and during the bankruptcy process. Spirit's shares tumbled more than 40% Tuesday morning, with the company's stock trading at just over $1.80 as of around 11 a.m. ET.
