Latest news with #NBFC-MFIs
&w=3840&q=100)
Business Standard
25-07-2025
- Business
- Business Standard
RBI to consider giving Section-8 MFI firms' access to credit bureaus
The lack of access to credit information leaves Section-8 MFIs in the dark about the worthiness of their clients, while allowing borrowers to exploit the arbitrage between Section-8 and mainline MFIs Raghu Mohan New Delhi Listen to This Article The Reserve Bank of India (RBI) is considering whether Section-8 companies or not-for-profit (NFP) entities involved in microfinance should get access to credit information companies (CICs). Under the Credit Information Companies (Regulation) Act (2005), only RBI regulated entities (REs) are allowed to hook into CICs or credit bureaus – that is sharing data with and accessing it from them. This leaves out data flow to Section-8 microfinance institutions (MFIs) as only non-banking financial companies (NBFCs) dedicated to microfinance (NBFC-MFIs) are eligible. A submission was also made to the banking regulator that Section-8 MFIs be allowed to convert to mainline NBFCs-MFIs.
Time of India
24-07-2025
- Business
- Time of India
Capital SFB Q1 profit rises 7% despite higher bad loan provisions
Capital Small Finance Bank reported a 7% rise in net profit at Rs 32 crore for the first quarter of the fiscal as compared with Rs 30 crore in the year ago period even as its provision to cover bad loans rose nearly four-fold. Its operating profit was 21% higher at Rs 51.4 crore. Explore courses from Top Institutes in Please select course: Select a Course Category Public Policy Data Science Artificial Intelligence others Operations Management Data Science Project Management Data Analytics healthcare MBA Finance Cybersecurity CXO Management MCA PGDM Leadership Digital Marketing Degree Healthcare Product Management Others Technology Design Thinking Skills you'll gain: Economics for Public Policy Making Quantitative Techniques Public & Project Finance Law, Health & Urban Development Policy Duration: 12 Months IIM Kozhikode Professional Certificate Programme in Public Policy Management Starts on Mar 3, 2024 Get Details Skills you'll gain: Duration: 12 Months IIM Calcutta Executive Programme in Public Policy and Management Starts on undefined Get Details by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Remember Him? Sit Down Before You See What He Looks Like Now 33 Bridges Undo Total provisions for the quarter stood at Rs 8.8 crore as against Rs 2.4 crore earlier. The bank's gross non-performing assets ratio rose marginally to 2.74% at the end of June from 2.69% a year back. Net NPA was at 1.39% against 1.35%. Defaults by two NBFC-MFIs with a total Rs 15 crore outstanding led to the rise in NPA, executive director Munish Jain said. The bank has no direct exposure to the microfinance sector while it lends to NBFC-MFIs. "We intend to keep gross NPA below 2.6%," Jain told ET. "On the net interest margin front, our aim is to maintain it at 4.1%," he said. Live Events The bank's gross advances rose 16.4% year-on-year to Rs 7,437 crore while Deposits were up 17% Rs 9,110 crore.
Time of India
15-07-2025
- Business
- Time of India
Asset quality stress in MFI sector expected to persist in H1 FY26: Report
Asset quality stress in the NBFC-MFI sector surged in 2024-25 amid borrower overleveraging as well as operational challenges, and the pressure is expected to persist in first half of the current fiscal, a report said. ICRA 's July 2025 analysis on the Non-Banking Financial Company - Microfinance Institution (NBFC-MFI) said that the AUM of the sector declined 12 per cent in FY2025. However, the rating agency said it anticipates growth to resume in FY2026 to 10-15 per cent. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo As per the report, asset quality stress surged in FY25 largely due to borrower overleveraging, sociopolitical disruptions, and operational challenges. ICRA has a negative outlook on the sector, given the lingering asset quality stress and subdued profitability. Live Events Overall stress in FY2025 surged to 15.3 per cent vis-a-vis opening stressed pool of 5.9 per cent as of March 2024 on account of significant deterioration in asset quality in the microfinance sector, the report said. Given the deterioration in asset quality, the report said the provision cover of NBFC-MFIs increased to about 4.8 per cent of on-book portfolio as on March 31, 2025, from 2.8 per cent as on March 31, 2024. The AUM of NBFC-MFIs declined by 12 per cent in FY2025 (growth of 29 per cent in FY2024) amid operational challenges and asset quality concerns. Further, the increase in borrower rejection rates resulted in subdued disbursements, it said. As per the recent RBI circular dated June 06, 2025, on review of qualifying assets criteria, NBFC-MFIs are now required to maintain qualifying assets of minimum 60 per cent of the total assets over the earlier requirement of 75 per cent. This shall improve NBFC-MFIs' loan diversity, thereby augmenting their credit risk profile, and enabling them to meet other credit requirements of their end borrowers, ICRA said.
Economic Times
08-07-2025
- Business
- Economic Times
Time for NBFC stocks to shine again? Policy support, repo rate cuts to benefit these 4 banking stocks
iStock NBFC stocks are expected to perform well in the upcoming quarter, bolstered by RBI rate cut and policy support for NBFC-MFIs Non-banking finance companies (NBFCs) have faced multiple challenges over the past few quarters amid delinquencies in unsecured loans, tight liquidity, and rigorous scrutiny by the Reserve Bank of India (RBI). However, their performance is expected to improve after cuts in interest rates and phased reduction in the cash reserve ratio (CRR) that will lead to an increase in liquidity and boost credit growth. The relaxation of regulations for NBFCs focused on gold loans and microfinance institutions (MFIs) will also help. Performance concerns were reflected in the share prices of NBFC companies in the first five months of 2025. The group of 104 listed companies in the financial services and consumer finance space, with a market cap of more than Rs.100 crore, delivered an equal weighted average return of -4.5% between 1 January and 31 May 2025. In comparison, the Nifty 500 equal-weighted index delivered -1.5% during the same period. Policy support The repo rate has been cut by 1 percentage point this year—25 basis points each in February and April, and 50 basis points in June. The CRR is being lowered by 100 basis points in four steps between September and November, a move that will lead to an infusion of an estimated Rs.2.5 lakh crore liquidity into the banking system. This, in turn, is expected to boost the net interest margins (NIMs) of increased liquidity and lower rates will support NIMs by reducing the cost of funds (CoF). The NIM is the difference between the interest income generated from lending activities and that paid on borrowed funds.'While the policy action is positive for the entire NBFC space, the players with high fixed rate assets (vehicle loans, loans against property) stand to benefit the most,' stated a recent ICICI Securities report. It expects the CoF to improve by 20-40 basis points in 2025-26 for most relaxation on new gold loans will be effective from April 2026. The loan-to-value (LTV) ceiling is being raised from 75% to 85% for loans with ticket sizes of less than Rs.2.5 lakh. This means that the gold loan focused NBFCs can lend more for every Rs.100 worth of gold. This will make the borrowings attractive and support the loan book the second key relaxation, the central bank dropped the qualifying assets threshold from 85% to 60% for NBFC-MFIs. This is the minimum amount of eligible microfinance loans that NBFC-MFIs must hold on their books, allowing them to diversify into more profitable segments, such as affordable housing or consumer finance.'With the qualifying asset threshold lowered, MFIs now have the flexibility to diversify their loan books, moving beyond traditional group lending to slightly larger ticket sizes. This will help stabilise the earnings across credit cycles,' said Harshal Dasani, Business Head, INVasset, Emkay report has stated that the NBFCs are set for risk-calibrated, profitable growth, aided by the reduction in cost of funding and easing of stress in some segments. Though the report expects a lacklustre performance in the June quarter, meaningful gains are expected from the second half of the current financial year and in 2026-27. Repo rate cuts spell bonanza for NBFC stocks Lower cost of funds will improve NIMs. The sentiment for the NBFC sector has improved since the policy measures were announced on 6 June. The group of 104 companies has generated an equal-weighted average return of 3.6% between 5 June and 1 July, compared with the Nifty 500 equal weighted index's 2.1% measures could result in a re-rating of NBFC stocks over the next three to six months, led by an improved margin outlook, stronger balance sheets and higher loan growth visibility, said Manish Goel, Founder and Managing Director, Equentis Wealth Advisory are the four NBFC stocks with broad analyst coverage and a significant buy rating. Stock price returns What do the analysts say? Aditya Birla Capital The firm reported a steady performance across business segments in the March 2025 quarter, with 6% year-on-year growth in net profit. It reported a strong loan growth in both NBFC lending and housing finance— 20% and 69% year-on-year, respectively. While the former was driven by SME and corporate loans, strong disbursements aided the latter. Health insurance, life insurance and asset management also performed well. The management expects margins to improve in the future, helped by a fall in the cost of funds and a gradual increase in the share of unsecured loans in its loan mix. The modifications in the strategy for customer selection in the unsecured segment will support disbursements in consumer and personal loans. A Motilal Oswal report estimated a consolidated return on equity (RoE) of 14% by 2026-27. Aptus Value Housing Finance The company reported a strong performance in the March quarter, with 26% and 25% growth in net profit and AUM, respectively, on a year-on-year basis. While volume growth supported the AUM, the assignment transaction of Rs.75 crore boosted the net profit. The company enjoys a strong capital adequacy ratio of 70%, which has helped it to report robust return ratios. Moreover, its steady cost-to-income ratio makes it a cost-efficient affordable housing finance lender. Strong asset quality, steady credit costs and likely revival in disbursements in 2025-26 are some of the key positives. Moreover, focus on increasing floating rate borrowings, to benefit from the ratecycle reversal, and a high share of fixed rate loans will improve spreads and profitability in the future. The management expects the AUM to reach Rs.25,000 crore by 2027-28, implying a 32% CAGR. An ICICI Securities report expects that the growth momentum will sustain due to the stringent credit monitoring, strong collection mechanism, focus on geographical diversification and controlled opex. PNB Housing Finance The NBFC reported a steady performance in the March quarter, with 25.3% year-on-year growth in net profit. An uptick in high-yielding segments, provision write-backs and efficient asset liability management supported the performance. To enhance growth, the company's management is focusing on affordable housing and emerging market segments. On the other hand, the company is slowing down disbursements in the prime segment due to the increased competition from large banks. Affordable housing and emerging market segments currently constitute 24% of the loan book and the management plans to scale up such segments to 40% by 2026-27. The increase in scale will impart efficiency gains by reducing opex and will lead to an improvement in return on assets (RoA). With 70% of borrowings on floating rate, the rate cut will prove favourable by lowering the borrowing costs. A recent Nirmal Bang report remains positive on the company due to its improved growth prospects, with expansion in emerging markets and affordable segments, along with the improving return ratios due to the likely NIMs expansion and benign credit costs. Shriram Finance It reported a subdued performance in the March quarter due to a spike in credit costs and contraction in NIMs. Tepid demand amid weak government capex and minor deterioration in asset quality weighed on its performance. Going forward, the margins are expected to improve, helped by an improved product mix, rate cut, and expectations of a higher government capex. Moreover, the asset quality is expected to stabilise in the second half of the current financial year. A recent Motilal Oswal report is bullish on Shriram Finance due to its market leadership, strategic diversification in high-growth, non-auto segments, potential for margin and operating efficiency improvements, attractive valuations and strong earnings visibility.
Time of India
01-07-2025
- Business
- Time of India
Gold loans turn microfinance companies' best bet amid fears about the unsecured
Kolkata: Gold loans appear to have emerged as the best bet for microfinance companies planning to increase the share of secured portfolio , although the regulator has tightened rules for lenders to the yellow metal. Companies like Arohan Financial Services and Uttrayan Financial Services are among the notable ones which have taken definite steps to explore this market segment. New gold loan norms, to be implemented from April 2026, have been made borrower-friendly, however. Loans against property (LAP) is the other preferred assets class for non-banking finance companies-microfinance institutions ( NBFC-MFI ), which are exploring opportunities outside the realm of microfinance to reduce the concentration risk taking advantage of a recent RBI directive allowing them to reduce the qualifying asset to 60% from 75% earlier. In other words, this new rule means NBFC-MFIs can have a 40% non-microfinance portfolio. Microfinance is unsecured, collateral-free loans offered to low-income households with annual income of less than ₹3 lakh. "We will explore secured assets like gold loans, micro LAP amongst others. This will help secure a better credit rating , portfolio diversity and better security and profitability," Arohan managing director Manoj Kumar Nambiar told ET. Uttrayan , on the other hand, on Wednesday unveiled its first dedicated gold loan branch near Kolkata. Arohan has prepared a concept note on foraying into the gold loan business which will be put up in the next board meeting. "The RBI guideline change on qualifying assets ratio to 60/40 is a welcome change as it helps board will discuss the proposal," said Nambiar, who is the chairman of industry body Microfinance Institutions Network. "People are primarily planning to venture into the gold loan business," said Alok Biswas, managing director at Kolkata-based Janakalyan Financial Services. Gold loans carry minimum risk as these are backed by gold ornaments. However, setting up a gold loan business needs a special eco-system for valuing the gold ornaments to be pledged and also to store them securely. CreditAccess Grameen , the country largest NBFC-MFI, has no plan to get into all these, said Udaya Kumar Hebbar, who superannuated from the company on June 25 and is now a non-executive director on the board.
