Moody’s Ratings has forecasted a 6.6% growth for the Indian economy in the fiscal year ending March 2025 (FY25).
This projection, while slightly lower than the Reserve Bank of India's (RBI) and other agencies' forecasts, aligns with Deloitte's prediction.
Moody’s anticipates strong credit demand and robust economic growth to strengthen the profitability of non-bank finance companies (NBFCs).
According to Moody's, the Indian economy is expected to have expanded by 8% in the 2023-24 fiscal year.
Despite rising funding costs for NBFCs, robust credit demand driven by India's strong economic growth is expected to support their profitability.
Moody’s also believes that favorable economic conditions will aid NBFCs in maintaining asset quality, even as interest rate hikes increase debt burdens for their customers.
Moody’s Focus on NBFCs:
Moody's Ratings projects a 15% growth in loans at NBFCs over the next 12 to 18 months.
This growth is expected to be fueled by various lending activities, including infrastructure financing by large government-owned NBFCs and loans to small and medium-sized enterprises.
NBFCs are expected to continue playing a crucial role in fulfilling the credit needs of individuals and businesses in India's vast economy.
However, Moody's notes a slowdown in growth for unsecured retail loans following the RBI's decision to increase the risk weight of such assets in December 2023.
The top 20 NBFCs, renowned for their market dominance and specialization in specific loan types, predominantly have government or large corporate group ownership.
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