Bank lending to NBFCs slows, growth halves over last year
bank borrowings to non-bank financing companies for nearly six years, the trend has now reversed. Latest RBI data for the period of July 2024 shows that the growth of outstanding credit exposure of banks to non-banking financing companies grew nearly half of the growth recorded in July 2023.
According to RBI data, the bank's outstanding credit exposure to non-banks stood at Rs 15.3 lakh crore as of July 2024, indicating an 12.7% on year growth that is approximately half of the growth rate reported in July 2023. On a sequential basis, the amount fell by 1.7%.
«The credit extended by banks to NBFCs which had earlier exhibited a consistent upward trend for close to six years and continued its acceleration along with the phased reopening of economies after the Covid-19 pandemic has now reversed,» said Sanjay Agarwal, Senior Director – BFSI Ratings, CARE Ratings. «Advances to NBFCs have experienced a slowdown in growth at 0.5% in July 2024 from December 2023. The reported growth rate of advances to NBFCs has been below the overall bank credit growth since December 2023. This can be attributed to regulatory actions (risk weights), base effect, and capital market borrowings.»
The proportion of NBFC exposure in relation to aggregate credit has reduced from 9.3% in July 2023 to 9.1% in July 2024, data showed.
Meanwhile, the personal loans segment’s growth rate slowed to 6.8% for the December-July period compared to the growth of 20.1% for the same period last year as along with an unfavorable base, growth in housing and
