NBFC Loan Disbursals Decline by 13% Due to Fall in Urban Loan Sanctioning

Non-Banking Financial Companies (NBFCs) witnessed a ~13% decrease in their loan disbursals during the September 2024 quarter, primarily driven by a 23% dip in urban loan sanctions, according to recent industry data.

Long-Term Loans Lead the Decline

The drop in loan disbursals was significantly influenced by a sharp 50% fall in long-term loans, those with a tenure exceeding three years. Other notable declines included loans against securities, which saw an 18% decrease, and education loans, which dropped by 10%, as per the Finance Industry Development Council (FIDC) report.At the close of the September quarter, total loans disbursed by NBFCs stood at approximately ₹7.8 lakh crore, compared to ₹8.9 lakh crore during the same period last year.

NBFCs granted ₹4.68 lakh crore in loans to urban areas, marking a 22.71% decline from the ₹6 lakh crore sanctioned in the previous year. Meanwhile, loan growth in semi-urban and rural regions remained relatively stable, with semi-urban loans growing 7.49% to exceed ₹73,000 crore, and rural sanctions increasing 6.54% to surpass ₹2 lakh crore.

NBFCs Contribute 13.6% to GDP Credit 

According to Reserve Bank of India (RBI) data, NBFCs accounted for 13.6% of the total credit extended in India in FY2023-24, representing 24.5% of the commercial banks’ outstanding credit as of March 2024. The steepest declines were observed in loans with tenures exceeding three years, which plummeted by 50% to ₹36,866 crore. Loans against securities fell nearly 18% to ₹6,524 crore, while education loans saw a 10% decrease to ₹11,617 crore during the September quarter.

On the positive side, short-term loans (less than one year) surged by over 191%, reaching ₹27,131 crore. Property loans also saw an increase of nearly 20%, amounting to ₹1.25 lakh crore by the end of the quarter.

Other Segments Show Positive Growth

Used car loans grew by 29% to ₹6,440 crore, while housing loans saw a 9% increase, reaching ₹57,854 crore. Consumer loans, too, experienced an 8% growth, totalling ₹28,499 crore, as reported by FIDC.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.