Rise in credit demand enables Non-Banking Financial Companies (NBFCs) to expand investor base, says Crisil report

The sustained growth in India’s retail credit market is creating fresh opportunities for Non-Banking Financial Companies (NBFCs) to broaden their investor base, according to a recent report by Crisil Intelligence. As of FY25, India’s retail credit stood at Rs. 82,00,000 (US$ 937 billion), registering a Compound Annual Growth Rate (CAGR) of 15.1% between FY19 and FY25. In FY25 alone, the sector grew by 14%, fuelled by robust demand in key segments such as housing finance, auto loans, credit cards, and personal loans. Crisil estimates the market will expand at a CAGR of 14-16% from FY25 to FY28, presenting a strong opportunity for NBFCs to diversify funding sources and attract new investor categories. Increased retail participation, coupled with sectoral tailwinds, is expected to drive momentum in areas including gold loans, microfinance, education loans, and consumer durable financing.

As of CY24, the household credit-to-GDP ratio in India was 42%, significantly less than China with 60%, the United States (US) with 69%, and the United Kingdom (UK) with 76%. The overall credit-to-GDP ratio also remained modest at 93%, compared to 138% in the UK and 198% in China. This underscores the significant headroom for further credit expansion, especially in underserved segments. The report attributes future growth to rising financial literacy, government-led financial inclusion initiatives, and improved credit access across socio-economic groups. With this evolving landscape, NBFCs are expected to play a pivotal role in bridging credit gaps and expanding their investor appeal.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.