NBFCs’ credit growth may slow to 13-15% in 2025-26: ICRA

Non-banking finance companies (NBFCs) are likely to see slowdown in credit growth to 13-15 per cent in FY25 and FY26 from 17 per cent growth in FY23-FY24, ICRA Ratings said. Overall, NBFCs’ outstanding credit is expected to grow from about ₹52 lakh crore in December 2024 to over ₹60 lakh crore in FY26.Retail loans, which constitute 58 per cent of NBFCs’ credit, will also see growth rate slowing down to 16- 18 per cent in FY25-FY26 from 23 per cent growth FY23-FY24. Lower growth is expected due to the high base created in the post-Covid expansion of this segment, amid concerns of borrowing over leveraging, which has impacted loan quality in some asset segments within this space. “Some asset segments, largely unsecured loans, namely – microfinance, personal loans, credit cards and unsecured business loans (~28 per cent of retail NBFC credit in December 2024) – have already witnessed higher stress in FY25 leading to elevated delinquencies and write-offs. While the stress is largely confined to the unsecured loans at present, in a constricted credit flow environment, refinancing ability of some of the borrower segments shall get adversely impacted. Thus, performance-secured loans availed by these borrowers, namely small-ticket vehicle loans and micro and small-ticket mortgage loans etc. shall remain a key monitor able,” said Karthik Srinivasan, Group Head Financial Sector Ratings, ICRA Ltd.