New Delhi, December 10 (IANS). The assets under management (AUM) of India’s non-banking financial companies (NBFCs) are expected to grow at 16-17 per cent annually in the current and next financial years to reach Rs 11 lakh crore by March 2027. This information was given in a report released on Wednesday.
The report said that different growth is being seen in vehicle sub-segments and the growth of loans for second hand vehicles remains stronger than that of new vehicles.
“The vehicle finance business is cyclical and largely influenced by trends in the broader economy. India’s gross domestic product (GDP) is estimated to grow at 7 per cent this fiscal year, compared to 6.5 per cent last year,” the CRISIL Ratings report said.
Also said that the growth rate is expected to be 6.7 percent in the next financial year also.
The report said that the strong momentum of India’s economy along with Goods and Services Tax (GST) reforms and reduction in interest rates will also support vehicle sales.
Malvika Bhotika, Director, CRISIL Ratings, said, “For most of the large NBFCs, the growth rate of second-hand vehicle loans is expected to be higher than the growth rate of new vehicle loans. Our analysis shows that their second-hand vehicle AUM has recorded a compound annual growth rate of 15 percent between FY 2020 to 2025, while the rate of new vehicle loan has been 11 percent.”
This growth trend is expected to continue in the medium term, as the unit cost of ownership of a used vehicle is lower than the unit cost of ownership of a new vehicle.
The report said that the market for second hand commercial vehicles is more established in the sub-segment. Where the trend for taxes and utility vehicles is increasing rapidly.
–IANS
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