the ability to undertake recoveries especially in the wholesale book will be crucial for focs to improve their asset quality going forwardnew delhi the profitability of foreign passenger vehicle nonbanking finance company captives focs is likely to remain subdued over the medium term according to investment information agency icra given the slowdown in passenger vehicle segment along with covidinduced disruption focs credit contracted by 8 per cent yearonyear in fy20 and further dipped by 4 per cent in h1 fy21 focs are an important constituent of passenger vehicle financing among nbfcs captive financing provides a competitive edge especially in the luxury car segment by offering lowcost credit and innovative financing models advt it also plays an important role in inventory and longterm financing for dealerships which supports dealers financial flexibility due to relatively low sales volume of foreign original equipment manufacturers in india manushree saggar vice president and head of financial sector ratings at icra said the challenging macroeconomic environment covid19 pandemicrelated lockdown as well as overall slowdown in the passenger vehicle segment along with cautious stance of focs towards wholesale lending led to a contraction in foc credit in fy20 and h1 fy21 however icra expects recovery for nbfc passenger vehicle credit in fy22 with an expected credit growth of 3 to 5 per cent yearonyear while market share of focs is expected to remain low in the overall nbfc passenger vehicle credit growth may look optically higher for focs due to low base she said with a relatively higher contraction in luxury car volumes compared to overall passenger vehicle sales the share of focs declined to 22 passenger vehicle of nbfc passenger vehicle credit as on september 30 2020 from 25 per cent as on march 31 2019 in terms of portfolio mix these focs are majorly retail focussed and share of dealer or channel financing has gradually been declining over the years as focs became more cautious amid rising delinquencies in the dealer segment as for asset quality 90plus days past due dpd for focs have been deteriorating over the past few years due to slippages in wholesale portfolio and gradual seasoning of retail loan book these focs reported a 90plus dpd of 58 per cent as on september 30 2020 up from 43 per cent as on march 31 2019 advt the ability to undertake recoveries especially in the wholesale book will be crucial for focs to improve their asset quality going forward the yields of focs are lower than the overall nbfc sector given the highly competitive market and target segment at the same time they have access to funds at competitive rates supported by their respective groups established relationships umbrella limits from foreign banks and high credit ratings supported by their parentage operating expenses are also moderate for focs due to their relatively lean structure as well as the synergistic benefits arising from their operational linkages with original equipment manufacturers credit costs which were traditionally lower for focs witnessed an uptick in recent