NewKerala.com

Key Points

NBFCs now account for 26% of India's GDP in credit, up from 16% in FY19. Their 13.9% CAGR since FY20 outpaces banks' 11.4% growth. MSME loans are expanding 9% faster through NBFCs than traditional banks. With deep rural reach and digital adoption, NBFCs are projected to hit Rs 74-77 trillion in credit by FY28.

Key Points: NBFC Credit Hits 26% of GDP in FY25 Outpacing Banks

  • NBFC credit grows at 13.9% CAGR vs banks' 11.4% since FY20
  • Targets Rs 74-77 trillion by FY28 with 15-17% growth
  • MSME loans expand 27-29%, 9% faster than banks
  • Gains market share in underserved rural and informal sectors
2 min read

NBFC credit to GDP has increased to 26% in FY25, continues to outpace banks: Report

NBFC credit surges to 26% of GDP in FY25, growing faster than banks with Rs 48 trillion in loans, per Ionic Wealth report.

"NBFC credit to GDP has increased to 26% in FY25, up from 16% in FY19 – Ionic Wealth Report"

New Delhi, July 22

The credit provided by Non-Banking Financial Companies (NBFCs) in India has seen a sharp rise over the years, with NBFC credit to GDP increasing to 26 per cent in FY25, up from 16 per cent in FY19, according to a report by Ionic Wealth.

This growth showed that NBFCs continue to outpace traditional banks and are playing an increasingly important role in India's financial ecosystem.

It stated, "NBFC credit to GDP has increased to 26 per cent in FY25, up from approx. 16 per cent in FY19".

The report mentioned that the NBFCs have emerged as key lenders to retail borrowers, Micro, Small and Medium Enterprises (MSMEs), and participants in the informal sector, segments that are often underserved by banks.

Their importance is growing as they adopt more customer-focused models and maintain a strong reach in both rural and urban areas.

The report noted that the share of NBFCs and Housing Finance Companies (HFCs) in the overall systemic credit has increased from 19 per cent in FY20 to 21 per cent in FY25. Their credit contribution is now higher than that of commercial papers and external borrowings in the credit system.

Over the period from FY20 to FY25, NBFCs have recorded a credit Compound Annual Growth Rate (CAGR) of 13.9 per cent, outperforming banks which reported a CAGR of 11.4 per cent during the same period.

Total NBFC credit reached Rs 48 trillion in FY25 and is projected to grow to Rs 74-77 trillion by FY28, suggesting a CAGR of 15-17 per cent, which is higher than the historical range of 11-13 per cent.

Looking ahead to FY2025-26, the report highlighted a positive growth outlook for NBFCs, especially in consumer and SME-focused financial products. Their ability to adapt quickly, maintain strong customer relationships, and cover underserved markets gives them a competitive edge.

The report further pointed out that NBFCs are expected to grow faster than banks in several key loan segments. MSME loans are expected to grow by 27-29 per cent, which is 9 per cent faster than banks.

With a large and underpenetrated credit gap, better use of formal data through GST, and their deep rural presence, NBFCs are set to play an even bigger role in India's credit landscape.

- ANI

Share this article:

Reader Comments

P
Priya S
While the growth is impressive, we need stronger regulations. Some NBFCs charge exorbitant interest rates that trap vulnerable borrowers in debt cycles. The RBI should monitor this sector more closely.
A
Arjun K
NBFCs are the real heroes of financial inclusion! They reach remote areas where banks don't have branches. My cousin in a village got a tractor loan processed in 2 days flat. Traditional banks would take weeks!
S
Sarah B
The 27-29% growth projection for MSME loans is exciting! As an entrepreneur, I've seen how NBFCs understand small business needs better than banks. Their digital processes are a game-changer for India's startup ecosystem.
V
Vikram M
RBI should ensure this growth doesn't lead to another IL&FS-like crisis. Rapid expansion is good, but not at the cost of financial stability. Need more transparency in NBFC operations.
K
Kavya N
The rural penetration numbers are most impressive! NBFCs are bringing financial services to farmers and small artisans who were completely excluded before. This is how we'll achieve true economic development.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50