Shenoy said Capitalmind is still collecting data on write-offs across different types of financiers, including corporate, retail, small and medium enterprises (SMEs), microfinance and credit cards. While large write-offs in microfinance and credit cards may be expected, he said the size of write-offs at some other finance companies has been surprising.
“Yes, so we are actually still collecting the data, but it comes only in the annual reports in most of the NBFC results,” Shenoy said.
He explained that technical write-offs are removed from the NPA book, reducing the reported gross NPA figure. For example, if a lender has a ₹1,000 crore loan book and ₹120 crore of bad loans, but writes off ₹100 crore, only ₹20 crore would remain as gross NPAs.
“So, you look at 2% and say, well, you know, they lend well, they only lose 2% of the money to defaults, but actually they’re losing 120 crore, which is 12% to effective defaults,” Shenoy said.
According to him, investors should therefore look at write-offs against the appropriate vintage of the loan book. For a short-term non-banking financial company (NBFC) loan, the previous year’s loan book may be a suitable base. But for long-term products such as home loans, investors may need to compare current write-offs with the loan book from two or three years earlier.
Shenoy said write-offs are not highlighted as prominently as gross NPAs in most financial reports. He believes investors need an additional measure to assess the quality of a lender’s book.
“I think there should be another number that talks about write-offs as a percentage of a previous year’s book, just to get an idea of how good the quality of the book is,” he said.
On insurance distribution reforms, Shenoy said regulatory changes that rationalise commission structures could hurt companies in the near term but strengthen the industry over the longer term.
He compared the changes with the mutual fund industry, where entry loads were removed in 2009 and direct plans were introduced in 2013. While there were concerns that distribution would weaken, Shenoy said the mutual fund industry subsequently became stronger in terms of growth and scale.
He also pointed to China’s insurance commission reforms introduced in 2023. According to Shenoy, the industry took a hit during the first year to year-and-a-half, but subsequently emerged stronger, with bank assurance commissions also improving in 2026 so far.
Shenoy said India needs greater focus on pure protection products and health insurance. He believes term plans have been relatively less affected by the changes in insurance commissions and could become more attractive for distributors.
He also sees a longer-term opportunity for insurance aggregators as the industry moves towards trail-based commissions. However, he expects some valuation adjustment in the near term where high multiples were supported by shorter-term cash flows.
On crude oil, Shenoy questioned the difference between the price India is reportedly paying and international market prices. He said a public-sector oil company executive had told him India was buying oil at around $120 a barrel, while spot prices were around $106 and December futures were near $102.
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Shenoy suggested the difference could partly be explained by the type of crude India imports, since the country does not primarily buy Brent or West Texas Intermediate (WTI) and instead sources crude linked to Middle Eastern and Omani varieties.
However, he said the current gap appeared unusually large compared with historical pricing.
“Typically, our prices are close enough to international averages. I’ve never seen a 10 to 15% difference as we’ve seen now,” Shenoy said.
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