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RBI relief fails to help, NBFC loans continue to fall
Mint Mumbai
|July 02, 2025
Bank credit growth to non-banking financial companies (NBFCs) continues to lose steam, even after the Reserve Bank of India (RBI) rolled back tighter risk-weight norms earlier this year to support the sector.
Experts said NBFCs are increasingly turning to bond markets for cheaper and quicker funding, while stress in microfinance and unsecured business loans has made banks cautious.
Data from the RBI showed that in May 2025, bank credit to NBFCs fell 0.3% year-on-year (y-o-y) to ₹15.63 trillion. In May 2024, loans to the sector rose 16% y-o-y. If loans to housing finance companies and public financial institutions are excluded, growth in bank lending to NBFCs slowed to 3.6% in May from 7.2% in April.
Experts say this slowdown is because NBFCs are preferring to raise funds through bond markets. Yields on commercial papers have fallen by more than 100 basis points (or 1 percentage point) between March and April this year. According to experts, fundraising through corporate bond issuances during Q1 has touched an all-time high of ₹3 trillion.
This story is from the July 02, 2025 edition of Mint Mumbai.
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