MF funding to NBFCs hits record Rs 2.77 trillion in May 2025: CareEdge

Mutual fund exposure to NBFCs rose 32.5% YoY to record Rs 2.77 trillion in May 2025, driven by CPs and corporate debt, while bank credit to NBFCs fell 0.3%

Mutual fund (MF) debt exposure to non-banking financial companies (NBFCs) soared 32.5 per cent on year in May, hitting a record high of ₹2.77 trillion.

 

It is in contrast to bank funding to NBFCs which shrank by 0.3 per cent on year to ₹15.62 trillion in May, according to CareEdge ratings.

 

The debt funding from mutual funds, which includes commercial papers (CPs) and corporate debt, remained over the ₹2 trillion level for 14 consecutive months. The previous highs were ₹2.69 trillion in April 2025 and ₹2.64 trillion in July 2018, rating agency data showed. 

 

CPs have consistently been over the one trillion mark for the past 18 months, currently totalling ₹1.42 trillion.

 

The investment in corporate bonds of NBFCs grew by 43.2 per cent on year to ₹1.35 trillion in May 2025. The share of corporate bonds increased to 5.5 per cent in May 2025 from 4.6 per cent the previous year.

 

The bank assistance to finance companies covers the loans. It does not account for the liquidity provided to NBFCs by banks via the securitisation route (direct assignment & pass-through certificates) as well as the treasury investments made by banks in the NBFCs’ capital market issuances.