Bank Lending to Non-Banking Finance Companies Surges 26% in FY26
Bank Lending to NBFCs Rises 26%, Fastest in FY26
The Economic Times
Image: The Economic Times
Bank lending to non-banking finance companies (NBFCs) rose 26% in the fiscal year 2026, marking the fastest growth in this sector. This increase is attributed to relaxed Reserve Bank of India (RBI) regulations and a decline in lending rates, encouraging banks to support NBFCs after a period of tighter credit conditions.
- 01Bank lending to NBFCs increased by 26% in FY26.
- 02This growth follows a quiet fiscal year where lending was restricted due to regulatory concerns.
- 03The RBI's adjustments in risk weights have made borrowing more accessible for NBFCs.
- 04Total outstanding loans to NBFCs reached ₹20.7 lakh crore by March 2026.
- 05Analysts predict continued growth in bank lending to NBFCs despite potential macroeconomic uncertainties.
Advertisement
In-Article Ad
In the fiscal year 2026, bank lending to non-banking finance companies (NBFCs) surged by 26%, the fastest growth rate for this sector. This increase follows a period of tighter lending conditions imposed by the Reserve Bank of India (RBI), which had raised risk weights on bank loans to NBFCs. The RBI's decision in November 2023 to increase risk weights by 25 percentage points has encouraged banks to resume lending to NBFCs, as concerns over credit risks have diminished. As of March 2026, the total outstanding loans to NBFCs reached ₹20.7 lakh crore (approximately $2.5 trillion USD), up from ₹16.4 lakh crore the previous fiscal year. Analysts suggest that while bank lending to NBFCs will continue to grow, it may not match the pace seen in FY26 due to ongoing macroeconomic uncertainties and rising bond yields, which could compel NBFCs to rely more on bank financing.
Advertisement
In-Article Ad
The increase in bank lending to NBFCs could lead to more accessible financing options for consumers and businesses, potentially lowering interest rates on loans. However, ongoing economic uncertainties may temper future growth.
Advertisement
In-Article Ad
Reader Poll
Do you think the rise in bank lending to NBFCs will benefit consumers?
Connecting to poll...
More about Reserve Bank of India
RBI Governor Urges Indian Banks to Strengthen Global Forex Presence
The Economic Times • May 2, 2026
RBI Increases Investment in US Treasuries Amid Geopolitical Uncertainty
The Economic Times • May 2, 2026
Are Indian Banks Open on May 2, 2026? Here's What You Need to Know
The Economic Times • May 2, 2026
Read the original article
Visit the source for the complete story.