NBFC growth likely to take a hit as banks show funding reluctance

According to RBI data, as on September 30, 2023, 37.8% of the NBFC borrowing was from banks

Non-banking financial companies (NBFCs) may witness a period of subdued growth as banks are slowing down funding following higher risk weights, amid tight liquidity conditions.

According to the latest Reserve Bank of India (RBI) data, the year-on-year (Y-o-Y) growth in bank credit to NBFCs dropped to 8.5 per cent in June compared to 16 per cent in May.

Additionally, data shows that incremental lending by banks to NBFCs has fallen to just Rs 7,420 crore in the April–June quarter of FY25 (Q1FY25). It is essentially due to banks running down their portfolios concerning state-owned finance companies.

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