NBFCs will continue to grow at a faster pace, have grown above India's GDP historically: Report
Non-Banking Financial Companies (NBFCs) are growing at a higher rate than India's overall economic growth and it is expected to continue its growth at a faster pace according to a new report released by Mavenark Advisors.
ANI
May 05, 2025 12:08 IST
New Delhi [India], May 5 (ANI): Non-Banking Financial Companies (NBFCs) are growing at a higher rate than India's overall economic growth and it is expected to continue its growth at a faster pace according to a new report released by Mavenark Advisors.
The report highlighted how NBFCs have played an increasingly important role in India's financial system over the past two decades and are now well-positioned to continue expanding, especially in the retail and rural segments.
It says "credit growth of NBFCs which has trended above India's GDP growth historically, is expected to continue to rise at a faster pace".
The report noted that NBFCs have shown strong resilience over the years. Their assets under management (AUM) have grown significantly--from less than Rs 2 trillion around the year 2000 to Rs 43 trillion by the end of FY24.
From FY19 to FY24, credit growth by NBFCs is estimated to have grown by a compounded annual growth rate (CAGR) of 12 per cent.
The report expects this trend to continue in FY25, supported by a rapid revival in the Indian economy and rising consumer demand.
In India's banking system, banks primary focus has largely remained on wholesale lending to large corporates, services, and agriculture sectors. As of FY24, only 34 per cent of the total bank credit went to retail borrowers.
This has left a significant gap in the retail lending space, which NBFCs have stepped in to fill.
According to the report, 48 per cent of the total credit given by NBFCs is to the retail segment--much higher than the share held by banks. This indicates a clear focus by NBFCs on serving individual borrowers, especially those from low-income or riskier profiles.
NBFCs have also been key in driving financial inclusion in India. With strong grassroots connections, these institutions cater to people in rural and semi-urban areas who are either unbanked or underbanked. They also lend to those without formal credit histories, such as workers in the informal sector. This role makes them an important part of the country's financial ecosystem and supports the government's broader goals of financial inclusion.
Overall, the report suggested that NBFCs will continue to grow rapidly, playing a critical role in bridging financial access gaps across the country. (ANI)
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