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Small finance banks to see 20% AUM growth
January 04, 2022
The small finance banks are likely to register a marginal rise in growth rate of their assets under management in FY 2021-22 to 20% growth witnessed in FY21, ratings agency ICRA said.
However, this growth rate will still be lower than the compound annual growth of around 30% during last five years.
The ratings agency said, “ICRA maintains its cautious stance as the recent rise in COVID-19 infections cloud play a spoilsport and impact the recovery in growth. The problem posed by the second wave of the Covid-19 pandemic led to a deterioration in the asset quality metrics in H1 FY22, nevertheless, some recovery is expected by the end of FY22”.
During the second wave of pandemic, SFBs had witnessed a decline in collections which resulted in them reporting Gross NPAs of 6.4% as on September 30, 2021 as against 5% as on March 21, 2021.
The gradual ramp-up in the collection efficiency of SFBs provides comfort, however, performance of the restructured portfolio remains monitorable, ICRA said.
ICRA VP and Sector Head, Financial Sector ratings Sachin Sachdeva said, “With the second wave of the pandemic impacting disbursements in Q1 FY22, the AUM growth rate declined in H1 FY22”.
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