Banks see loan rivals in Street, non-banks

Robust markets, rise of NBFCs challenge banks: RBI report

- Shayan Ghosh

The Reserve Bank of India (RBI) said on Monday that banks will continue to face competition from non-bank sources in lending to companies, while fast-changing technology could change how customers transact and pose cybersecurity risks.

In its report on trends and progress in India’s banking, RBI said that despite a moderation in bank credit in fiscal year 2025 (FY25), the total flow of financial resources to the commercial sector increased, thanks to non-bank resources.

RBI defines the flow of financial resources to the commercial sector as the aggregate of bank loans, loans from non-banks, and investment by Life Insurance Corp. in corporate debt, besides funds raised overseas.

"The increase in funding from non-bank sources during 2024-25 was largely driven by buoyant domestic capital markets, reflected in higher equity issuances and increased corporate bond placements amidst easing market conditions, enhanced credit flow by non-banking financial companies (NBFCs), and a rebound in short-term external credit,” it said.