According to the latest Reserve Bank of India (RBI) data, the yearon-year (Y-o-Y) growth in bank credit to NBFCs dropped to 8.5 per cent in June compared to 16 per cent in May.
Additionally, data showed that incremental lending by banks to NBFCs fell to just ₹7,420 crore in the April-June quarter of FY25 (Q1FY25). It is essentially due to banks running down their portfolios concerning stateowned finance companies.
In Q1 FY24, incremental bank lending to NBFCs was ₹92,223 crore and in FY24 it stood at ₹2.06 trillion.
In November last year, the RBI increased risk weights of banks lending to NBFCs, resulting ina slowdown in flow of credit to the sector.
According to the RBI data, as on September 30, 2023, 37.8 per cent of the NBFC borrowing was from banks.
The NBFC sector may see a period of muted assets under management (AUM) growth or low disbursements.
"Given that bank funding constitutes a major portion of NBFC borrowing sources, the industry may experience a moderation in AUM growth in the near term," said Anil Gupta, vice-president, financial ratings at ICRA.
This story is from the August 05, 2024 edition of Business Standard.
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This story is from the August 05, 2024 edition of Business Standard.
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