Source: BS
Context:
Crisil Ratings reports that NBFCs face tightened funding conditions despite healthy balance sheets and robust credit demand. Large NBFCs can access bond markets and other funding avenues; mid-sized and emerging players struggle to secure stable, low-cost financing.
Growth Outlook
- NBFCs’ assets under management (AUM) projected to grow 18–19% in FY26–FY27, surpassing ₹50 trillion by March 2027.
- Strong demand expected from consumption-driven sectors.
Funding Challenges
- Bank lending plateaued at ₹13.8 trillion in September 2025, despite rollback of higher risk weights in April 2025.
- Smaller NBFCs rely on securitisation, loan sell-downs, and funding diversification.
- External commercial borrowings (ECBs) and bond markets increasingly used, especially by housing finance companies (HFCs).
Asset Quality Risks
- Early delinquencies rising in:
- Vehicle finance
- Unsecured MSME loans
- Loan Against Property (LAP) segment
Implications
- Robust growth outlook is tempered by funding constraints for mid-sized and smaller NBFCs.
- Diversified funding strategies and enhanced bank credit flow are crucial for sustaining growth.
- Asset quality pressures in specific segments may require careful monitoring and risk mitigation.
