NBFC’s credit to GDP has grown to 26% in FY25, continuing to outpace banks: Report
According to Ionic Wealth’s report, credit provided by India’s non-bank finance companies (NBFCs) has risen sharply, with NBFC credit rising to GDP growing to 26% in FY26, up from 16% in FY195.
This growth suggests that NBFC continues to outperform traditional banks and plays an increasingly important role in India’s financial ecosystem.
“NBFC credit to GDP rose to 26% in fiscal 25, up from about 16% in fiscal 2019,” it said.
The report mentioned that NBFC has become a key lender for retail borrowers, micro, small and medium-sized enterprises (MSMES) and participants in informal sectors, which are often served by banks.
Their importance is growing as they adopt more customer-centric models and maintain strong influence in rural and urban areas.
The report notes that NBFC and Housing Finance Corporation (HFC) share of overall system credit has increased from 19% in fiscal 20 to 21%. Now, their credit contribution is higher than external borrowing in business documents and credit systems.
From FY20 to FY25, NBFC recorded a CAGR of 13.9%, which outperformed banks with a CAGR of 11.4% over the same period. NBFC’s total credit reached Rs 48 trillion in FY25 and is expected to grow to Rs 74-77 trillion by FY28, indicating a CAGR of 15-17%, higher than the historical range of 11-13%.
Looking ahead to fiscal 2025-26, the report highlights the positive growth prospects of NBFC, especially in financial products centered on consumers and small and medium-sized enterprises. Their ability to adapt quickly, maintain strong customer relationships and cover underserved markets gives them a competitive advantage.
The report further points out that in several key lending areas, NBFC is growing faster than banks. MSME loans are expected to grow 27-29%, 9% faster than banks.
With a larger credit gap, through GST, the NBFC will play a greater role in India’s credit landscape.
