Government-Owned Non-Bank Financial Institutions Set to Expand Market Share

In a new assessment, S&P Global Ratings forecasts significant growth for India's government-owned non-bank financial institutions over the coming years. These entities are slated to increase their market presence, bolstered by their crucial role in economic development, as outlined in the report 'Indian Government-Owned Financial Institutions: In The Fast Lane.'

S&P credit analyst Deepali Seth-Chhabria highlighted the sector's alignment with national strategic goals, emphasizing that government-related entities (GREs) enjoy reinforced support from the government. This support stems from their policy role, granting them financial flexibility, access to more affordable funding, and avenues for asset quality enhancement.

The report anticipates a 15% annual loan growth for financial GREs, propelled by strategic policy mandates. Key players such as the National Bank for Financing Infrastructure and Development (NaBFID) and the Indian Renewable Energy Development Agency Ltd. (IREDA) are expected to expand significantly from their current low bases. While some non-banks face exposure to weaker borrowers, sovereign backing and government guarantees help mitigate this risk, according to S&P analyst Geeta Chugh.

(With inputs from agencies.)