New Delhi, Aug. 27 -- Non-banking financial companies (NBFCs) could face a 5-15 basis point increase in funding costs if the Reserve Bank of India (RBI) raises the repo rate by 50 basis points, potentially putting pressure on margins, according to Kotak Institutional Equities.

The brokerage said NBFCs are nevertheless expected to have a strong year, supported by healthy loan growth and asset quality. Most players are likely to report continued growth in assets under management (AUM), it said.

Asset Yields Key To Margins

Kotak said asset yields will remain critical for NBFC margins as higher borrowing costs could be partly offset if lending rates remain stable or increase in select segments, reported ANI.

However, elevated competition ...