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NBFCs Outpace Banks in Key Lending Areas
14 Jul
Summary
- NBFCs surpassed banks in housing loans between March and May.
- Non-bank lenders lead banks in vehicle and consumer durable finance.
- Banks significantly lead NBFCs in the gold loan segment.
Non-banking financial companies (NBFCs) are demonstrating aggressive growth in lending, surpassing their banking counterparts in key areas like housing, vehicle, and consumer finance. Between March-end and May-end, NBFCs provided ₹13,413 crore in housing loans, slightly more than the ₹13,072 crore from banks. The gap was even wider in vehicle and consumer durable segments during this period.
NBFCs' expansion into these sectors is attributed to their focused business structures and ability to cater to a broader customer base, including those with less-than-perfect credit profiles. Analysts note that NBFCs' vertical heads are empowered to drive business more effectively in their specialized segments. This contrasts with banks, which are perceived to be more cautious in lower-yielding, less risky asset classes.
However, banks maintain a dominant position in gold loans, with loans increasing by ₹52,908 crore compared to ₹19,808 crore for NBFCs in the same financial year up to May-end. Despite this, NBFCs are entering FY27 with cleaner balance sheets and improved growth prospects, even as liquidity pricing remains a challenge.
