Major NBFCs: Stable now but bumpy road ahead says Fitch

Fitch Ratings has come out with its report on Major Indian non-bank finance companies (NBFC). The rating agency expects delinquencies to increase and asset quality to come under pressure in this asset class.

Stable, But Cautious Outlook: Fitch Ratings maintains a stable but cautious outlook on the major Indian non-bank finance companies (NBFCs) sector for 2012. The impact of a cyclical increase in delinquencies and a drop in loan growth could be absorbed by high pre-provision profits, and capital buffers are adequate at most of the nine major NBFCs (large commercial finance companies) covered in this report. However, regulatory changes could increase the costs of raising fresh capital and funding, and sharply reduce profitability in the medium term.

Asset Quality Deterioration Expected: The cyclical headwinds from a moderating economy are affecting the NBFCs' asset quality, and loan growth will slow down in 2012. Fitch expects "reported" non-performing loan (NPL

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