Archive · 16 Dec 2025
NBFCs Lead India's Credit Growth
In 2025, India's credit market saw a big change.
Non-Banking Financial Companies (NBFCs) grew much faster than banks, lending 20% more.
This happened because NBFCs are better at understanding local needs and offering quick, flexible loans.
Different types of loans did well, like gold loans and small business loans, while others, like personal loans, had some problems.
The government's interest rate cut and tax changes also helped people feel more confident about borrowing.
Looking ahead, NBFCs are expected to keep growing fast, but they need to be careful with their lending.
Banks are still important for big loans, and together, they help keep the credit market stable and growing.
NBFCs grew their credit portfolios by 20% in FY25, outpacing banks at 12%.
Collateral-backed lending (gold loans, secured MSME credit, affordable housing) showed resilience, while microfinance and unsecured lending faced pressure.
NBFCs are better positioned to serve micro markets with unique income dynamics and risk patterns.
Monetary policy rate cuts and GST rationalization boosted borrowing sentiment and discretionary spending.
NBFCs are projected to maintain 15-17% loan book growth in CY26, supported by softer rate conditions and improving liquidity.
- Who
- NBFCs, Banks, Indian Borrowers, Monetary Policy Committee (MPC)
- What
- Shift in India's credit landscape with NBFCs leading growth, driven by structural changes and policy shifts
- When
- Fiscal Year 2025 (CY25) and projections for CY26
- Where
- India, with a focus on semi-urban and rural markets
- Why
- To meet evolving credit needs, support domestic demand, and foster economic growth
NBFC Advocates
Traditional Banking Supporters
Credit Growth Drivers
NBFC Advocates
NBFCs are better positioned to meet the financing needs of households and enterprises due to their flexibility and local understanding.
Traditional Banking Supporters
Banks continue to anchor prime retail and corporate credit, ensuring stability and broad access to credit.
Credit Market Segmentation
NBFC Advocates
India's credit system is evolving into micro markets, each with unique income dynamics and risk patterns, which NBFCs are better equipped to serve.
Traditional Banking Supporters
Banks provide a stable and reliable credit source for prime segments, maintaining overall market stability.
Future Growth Prospects
NBFC Advocates
NBFCs are projected to maintain a loan book growth of 15-17% in CY26, driven by softer rate conditions and improving liquidity.
Traditional Banking Supporters
Banks are expected to see a pickup in corporate loan growth in the second half of the financial year.
- NBFC Credit Growth (FY25)
- 20%
- Bank Credit Growth (FY25)
- 12%
- Projected NBFC Growth (CY26)
- 15-17%
- Key Credit Segments
- Gold loans, secured MSME credit, affordable housing, microfinance, unsecured lending
- Monetary Policy Impact
- Rate cut improved sentiment and borrowing confidence
- GST Rationalisation Impact
- Boosted discretionary purchases, especially in tier-II and tier-III markets
Sources
‘Consumption demand likely to be sustained, ’ says CS Setty, Chairman, SBI
FMCG growth slips in November, but rural gallops
India needs more credit to become a developed nation by 2047
Credit demand likely to rise again by FY26 end as asset quality improves: TransUnion CIBIL
India’s economy on track to reach 7 pc this fiscal: Report
GST rate cuts spur demand for consumer loans to buy durable goods, two-wheelers
Gold loans outshine personal loans
