NBFCs bank on surplus liquidity for credit push

THE BUSINESS ENVIRONMENT is set to turn favourable for non-banking financial companies (NBFCs), thanks to two recent developments.

- NARAYANAN V

THE BUSINESS ENVIRONMENT is set to turn favourable for non-banking financial companies (NBFCs), thanks to two recent developments. The Reserve Bank of India's (RBI) sharper-than-expected 50 basis point rate cut and the earlier easing of risk weight norms on unsecured lending—both expected to improve liquidity and significantly boost bank funding to the sector.

At its Monetary Policy Committee meeting earlier this month, the RBI cut the repo rate by 50 basis points to 5.5%—its third reduction since February 2025, totaling 100 basis points. The central bank also slashed the cash reserve ratio (CRR) by 100 basis points, injecting ₹2.5 lakh crore of durable liquidity into the system.