NBFCs and HFCs Loan Growth Slows to 17% in FY25 as Economic Conditions Weaken

A Jefferies report forecasts a decrease in loan growth for Indian NBFCs and HFCs to 17% in FY25, down from 21% in FY24, owing to weaker credit demand from softer macroeconomic conditions. The sector is expected to stabilize by FY26, particularly in secured loans as economic activities improve.

Loan growth in India's Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs), excluding Infrastructure Finance Companies (IFCs), is expected to decelerate to 17% in FY25 from 21% in FY24, according to a report by Jefferies. The slowdown is reportedly due to diminished credit demand amid softer macroeconomic conditions.

The report projects that loan growth will stabilize at healthy levels by FY26. It cites the Reserve Bank of India's guidance on reducing lending to unsecured and microfinance (MFI) segments, alongside a cyclical downturn in industries such as automobiles, as key factors behind the moderation.

Asset Under Management (AUM) growth for NBFCs is predicted to slow to 20% in FY25 from 24% in FY24. Conversely, HFCs could see AUM growth rise to 12-13% in FY26 from 11% in FY24. The economic outlook is expected to bolster sector stability by FY26, with an overall AUM growth rate of 19% projected for the FY25-27 period.

(With inputs from agencies.)