Assets Under Management (AUM) in NBFCs

What is the meaning of Assets Under Management (AUM) in an NBFC?

In an NBFC, Assets Under Management (AUM) refers to the total market value of all the financial assets that the NBFC manages in its books, which generates revenue for it. 

This includes two categories: 

a) money invested in stocks, bonds, cash, real estate, and other investment vehicles.

b) money lent out.

AUM is a key metric for NBFCs, as it is a measure of the size and scale of their business. The larger AUM typically means that the NBFC has more assets to invest, which can lead to higher profits. Additionally, AUM can be used to assess the financial strength of an NBFC, as it indicates how much money the NBFC has available to meet its financial obligations.

Overall, AUM is an important metric for NBFCs. It is a measure of the size and scale of their business, and it can be used to assess their financial strength and most importantly, AUM can be used to track the growth of an NBFC's business over time.


For calculating Assets Under Management (AUM) of an NBFC do we add interest receivable on loans or only the loans we have given?

No. Interest receivable is not included while calculating AUM. Interest receivable is not an asset, as it is not a physical asset that the NBFC owns. It is simply a future right to receive money.

The only assets that should be included in the calculation of AUM are the loans that the NBFC has given. This is because these loans are physical assets that the NBFC owns. They have a market value, and they can be used to generate income for the NBFC.

Interest receivable, on the other hand, is not a physical asset. It is simply a future right to receive money. This right may or may not be realized in the future, and it does not have a fixed market value. Therefore, it should not be included in the calculation of AUM.

For example. Let's say that an NBFC has given out a loan of 1 Crore. The market value of this loan is 1 Crore. The interest receivable on this loan is 1 lakh. The market value of the interest receivable is not fixed, and it may or may not be realized in the future. Therefore, it should not be included in the calculation of AUM. Hence, the AUM of NBFC in this example is 1 Crore only.


This blog is authored by Company Secretary Ronak Gupta. He is author of many blogs and runs many websites and youtube channels. His work is dedicated to corporate laws, legal, secretarial, professional services and also in strategy formulations for corporates. Mail him at: csronakgupta23@gmail.com or call at :9910226715

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