NBFCs in India show strong growth amid credit expansion and monsoon risks

Non-banking financial companies (NBFCs) in India are projected to report strong second-quarter results for FY27, with core profit before tax expected to grow between 12% and 43% year-on-year. This growth is driven by loan expansions of 15% to 37%, according to a report by Kotak Institutional Equities.

Despite this momentum, several headwinds may impact future outlooks. Rising borrowing costs due to higher bond yields and monsoon-related stresses—including floods in the north and droughts in Maharashtra and Karnataka—could affect rural markets, particularly in vehicle finance and MSME portfolios. While asset quality remains stable, there is potential for increased stress in tractor and commercial vehicle segments.

Separately, a joint report by the Finance Industry Development Council and TransUnion CIBIL highlights the expanding role of NBFCs in India’s credit ecosystem. As of June 2026, NBFCs accounted for 47% of new-to-credit consumer originations. The sector has seen significant expansion in semi-urban and rural markets, which now represent 58% of NBFC loan volumes, and has increased its share of retail loan originations from 33% in 2016 to 43% in 2026.