The non-banking financial company (NBFC) sector in India is expected to see its total balance sheet hit Rs 92.9 trillion by FY28, with an annual growth rate of nearly 15 percent, according to a report by Brickwork Ratings. In FY25, the sector’s total assets were at Rs 61.1 trillion, driven by strong loan demand in retail, micro, small, and medium enterprises (MSME), and services segments.
Credit growth in FY25 reached 19.4 percent year-on-year, surpassing the growth of scheduled commercial banks (SCB) at 11.5 percent. It is anticipated to grow by 16 percent between FY26 and FY28, indicating increased financial inclusion and higher household or SME leverage. The report highlighted the importance of stricter prudential norms and disclosures due to NBFCs’ systemic role, along with their linkages to banks or mutual funds, which amplify credit cycle risks and liquidity vulnerabilities.
Hemant Sagare, Director of Ratings at Brickwork Ratings, mentioned that India’s NBFC sector is on a stable trajectory, supported by steady credit growth, improving asset quality, and digital integration. However, entering FY27, the sector faces performance discrepancies as strong growth coexists with mounting stress in unsecured and rural credit segments. Elevated funding costs, geopolitical influences, and tighter regulations are reshaping risk profiles, favoring NBFCs with robust digital risk systems and regulatory compliance for sustained resilience and credit stability.
The report noted a significant improvement in NBFC asset quality, with gross non-performing assets (GNPA) decreasing from 3.5 percent in FY24 to 2.9 percent in FY25, while net NPAs remained stable at around 1 percent, supported by widespread gains and reduced slippages. Looking ahead, asset quality is expected to remain relatively stable in the short term, influenced by household cash flows, MSME earnings, and leverage patterns, with slippages managed through capital buffers and prudent provisioning. The long-term outlook on NPA trends will hinge on disciplined credit expansion, enhanced governance, secured lending practices, and robust monitoring systems.
