NBFC Assets Set to Cross Rs 50 Lakh Crore by 2027, MSME Loans Raise Concerns
India’s non-banking financial companies (NBFCs) are projected to achieve a significant milestone, with their assets under management expected to surpass Rs 50 lakh crore by March 2027, according to a recent Crisil Ratings report. The sector is forecast to maintain steady growth of 18-19% over the current and next fiscal years.
Key Takeaways
- NBFC AUM to grow 18-19% annually, crossing Rs 50 lakh crore by March 2027
- MSME loan delinquencies rising despite overall sector growth
- Gold loans expected to outperform other asset classes
- Bank funding access remains critical for mid-sized NBFCs
Growth Drivers and Sector Performance
The sustained growth momentum is primarily driven by robust consumption demand supported by favorable policy measures. “Recent policy measures, such as rationalisation and reduction of goods and services tax (GST) rates, together with benign inflation, will help sustain retail credit demand across asset classes,” the report stated.
However, Crisil Ratings cautioned that risk management strategies and funding accessibility will create varying growth trajectories across different entities and asset segments.
MSME Loan Concerns Emerge
A significant red flag has emerged in the unsecured MSME business loans segment, which constitutes approximately 6% of total NBFC AUM. This segment has experienced rising delinquencies due to increased borrower leverage and overlaps with microfinance customer profiles.
The growth rate for MSME loans is expected to decelerate substantially to 13-14% from the impressive 31% growth recorded in the previous two fiscal years.
Personal Loans Show Recovery
In the personal loans segment, which accounts for 11% of NBFC AUM, growth patterns are showing signs of recovery. After dropping sharply from 37% in fiscal 2024 to 18% last fiscal year due to regulatory adjustments and strategic repositioning, personal loan growth is projected to rebound to 22-25% over the current and next fiscal periods.
Gold Loans Outperform
The gold loan segment, representing nearly 6% of AUM, continues to demonstrate strong performance compared to other asset classes. This outperformance is attributed to increased formalization in the sector, migration from unorganized lenders, favorable gold prices, and growing NBFC interest in gold financing.
Funding Challenges Persist
Access to bank funding remains a critical growth determinant, particularly for mid-sized NBFCs that have fewer financing alternatives compared to their larger counterparts.
“Despite the rollback in risk weights from April 2025, bank lending to NBFCs is yet to see a pick-up and stood at Rs 13.8 lakh crore as of September 2025, just marginally above the levels seen a year back,” said Ajit Velonie, Senior Director at Crisil Ratings.
Velonie further emphasized that “While larger NBFCs have accessed other funding avenues such as the debt capital market and external commercial borrowings, others have fewer alternatives. Hence, the extent of rebound in bank funding will influence the growth outlook for these NBFCs.”
The report underscores the dual narrative of robust overall growth coupled with segment-specific challenges that will shape India’s NBFC landscape in the coming years.
