Domestic rating agency India Ratings on Tuesday upgraded its outlook on the non-bank lenders to “neutral” from “improving” on better collection efficiencies and asset growth in the sector.
It, however, said that liability management is key for managing margins and loan growth for non-bank finance companies (NBFCs) and housing finance companies (HFCs).
The agency said that with the onset of normalcy in lending, the on-balance sheet liquidity would also normalise, negating the impact of the rising cost of funds, thereby protecting margins to a certain extent.
In the mid-year outlook on the sector, it said that a lower credit cost for 2HFY23 would aid profitability during the fiscal.
Higher inflationary pressure on borrowers and interest rates may deter demand normalisation in the near term but the festive season demand could support the baseline credit offtake, it said.
On the securitisation front, a major source of balance sheet management for lenders, the agency said it has witnes



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