The assets under management (AUM) of non-banking financial companies (NBFCs) are expected to grow at a steady 18–19 per cent this fiscal and the next, and surpass Rs 50 lakh crore by March 2027, according to a Crisil Ratings report released on Monday.
The ratings agency said the expansion will be supported by strong consumption demand. “Recent policy measures, such as rationalisation and reduction of GST rates, together with benign inflation, will help sustain retail credit demand across asset classes,” it noted.
However, Crisil added that risk calibration and funding access could lead to divergent growth trends across NBFCs and their lending segments.
The unsecured MSME business loans, accounting for nearly 6 per cent of NBFC AUM, have seen a rise in delinquencies due to higher borrower leverage and overlaps with the microfinance customer segment.
As a result, the segment’s AUM growth is expected to moderate to 13–14 per cent, sharply lower than the 31 per cent growth recorded in each of the past two fiscals.
Unsecured loan performance is expected to vary across sub-segments. Personal loan growth, which had surged 37 per cent in FY24, slowed to 18 per cent last fiscal as lenders recalibrated customer segments following regulatory interventions.
With improved performance of recent originations, Crisil expects personal loan growth to recover to 22–25 per cent over this fiscal and the next.
Gold loans, which form around 6 per cent of AUM, are set to continue outperforming other retail asset classes. The segment will be buoyed by increased formalisation, rising gold prices, and the entry of more NBFCs into the gold financing space, the report said.
Vehicle finance and home loans together make up nearly 44 per cent of the NBFC sector’s AUM. According to Crisil, both segments are expected to grow at 18–19 per cent over the next two fiscals.
The recent GST cuts have boosted vehicle sales, especially in the passenger car segment.
This momentum, supported by rising demand for premium vehicles and greater focus on used-vehicle financing, is likely to keep AUM growth steady at 16–17 per cent, despite stiff competition from banks in new-vehicle financing.
In home loans, which account for about 22 per cent of NBFC AUM, growth is projected at 12–13 per cent over the coming two fiscals, compared with around 14 per cent last year.
Crisil attributed the slight slowdown to intense competition, particularly from public sector banks, in the prime home loan segment, as well as expected moderation in residential real estate sales across the top seven cities.
Crisil underscored that funding availability, especially from banks, remains critical to NBFC growth.
“Despite the rollback in risk weights from April 2025, bank lending to NBFCs is yet to see a pickup and stood at Rs 13.8 lakh crore as of September 2025, just marginally above the levels seen a year back,” said Ajit Velonie, Senior Director, Crisil Ratings.
While larger NBFCs have diversified funding sources, including debt capital markets and external commercial borrowings, mid-sized players remain heavily reliant on banks.
“The extent of rebound in bank funding will influence the growth outlook for these NBFCs,” Velonie added.
Krishnan Sitaraman, Chief Ratings Officer at Crisil Ratings, said, “Vehicle finance and home loans will see steady growth amid intensifying competition. However, exercising due caution on heightened customer leverage, NBFCs will adopt risk-calibrated growth, especially in the MSME and unsecured loan segments.”