Gold NBFCs to Witness 20% Surge in AUMs This Fiscal

SEATTLE (Scrap Monster): Crisil Ratings- the leading credit rating agency forecasts 18-20% growth in assets under management (AUM) of non-banking financial companies (NBFCs) during FY22. The AUM is expected to touch INR 1.3 lakh crore this fiscal, compared with INR 1.1 lakh crore during FY21. The growth forecast is despite the contraction in AUM during the initial quarter of the current fiscal, on account of business disruptions due to Covid-19 pandemic.

The ratings agency noted that there has been a renewed demand for gold loans from micro enterprises and individuals with the pickup in economic activity following the Covid-19-induced lockdowns. The gold loan disbursements by NBFCs have witnessed notable rebound in Q2 this fiscal. The momentum is expected to continue, said Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, Crisil Ratings. The overall credit profile of gold-loan NBFCs to remain stable, he added.

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According to the report, gold loans by NBFCs are generally considered as highly secured. Furthermore, it generates superior returns, while witnessing minimal credit losses. Hence, they are comparatively more risk-free in comparison with those that extend loan to other retail asset classes.