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NBFCs gain ground in specialised retail credit as banks remain selective

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NBFCs gain ground in specialised retail credit as banks remain selective

The shift is being driven by segments where NBFCs have traditionally had an advantage in distribution, underwriting and servicing, including gold loans, consumer durable finance, vehicle loans and credit to borrowers outside the prime banking franchise.

I hold new banknotes, symbolizing financial growth, with a modern bank and muted cityscape behind me.

NBFCs captured 43% of retail loan originations by volume in Q1 FY27. Retail credit grew 21.4% in July, led by gold loans and consumer durables. Rising gold prices boosted lending, but delinquencies signal emerging risks. Higher funding costs and asset quality will determine whether NBFCs can sustain growth.

Non-banking financial companies are gaining ground in India's retail credit market, particularly in specialised and smaller-ticket segments, even as banks continue to expand retail lending at a strong pace. NBFCs accounted for 43% of retail loan originations by volume and 30% by value in the quarter ended June 2026, highlighting their growing role in new credit even though banks continue to dominate the overall market. The shift is being driven by segments where NBFCs have traditionally had an advantage in distribution, underwriting and servicing, including gold loans , consumer durable finance , vehicle loans and credit to borrowers outside the prime banking franchise. RBI data show that NBFC retail credit has been growing faster than bank retail credit, with gold loans emerging as the strongest growth category. Advt

5%, according to RBI data. 54 lakh crore by the end of July. The growth is not, however, evidence of a broad retreat by banks from retail lending.


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