I want to understand how AUM and Disbursement works in a NBFC or HFC.
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AUM refers to the total market value of assets managed by a financial institution, including investments and deposits. Disbursement growth, on the other hand, pertains to the increase in the amount of money disbursed or lent out by the bank to borrowers. While AUM reflects the total value of assets managed, disbursement growth measures the bank’s lending activity and its ability to expand its loan portfolio.
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Current Year AUM = Previour Year AUM + Disbursements - Repayments (Principle repayments by Customer)
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Quick clarification @Divyam.
Wouldn’t deposits be liabilities and not included in AUM?
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From gemini, “For AUM, the focus is on the total value of client funds being managed or held by the institution, regardless of the specific balance sheet classification. Many banks include client deposits, along with investments like mutual funds, stocks, and bonds, in their AUM calculations to measure the scale of their client relationships and the total pool of money they influence or manage for a fee.”