Rise in credit demand enables NBFCs to expand investor base, says Crisil report
The rising demand in India’s retail credit market has thrown up new opportunities for Non-Banking Financial Companies (NBFCs) to widen their investor base, as per a recent report by Crisil Intelligence, ANI reported.
The growing demand in India’s retail credit market has opened new opportunities for Non-Banking Financial Companies to expand their investor base, according to a recent report by Crisil Intelligence.
The report highlighted the strong and consistent growth seen in the Indian retail credit space and predicts continued momentum over the next few years.
It stated, “The increasing demand and positive sentiments in the Indian retail credit market present an opportunity for both banks and NBFCs to broaden their investor base.”
With more retail borrowers jumping on the bandwagon, NBFCs have the opportunity to diversify funding sources and woo new categories of investors. The report shows that the retail credit market in India has been growing at a fast pace and is projected to register a compound annual growth rate (CAGR) of 14-16 per cent between FY25 and FY28.
This strong growth trajectory is steered by steady demand for various retail credit products such as housing finance, gold loans, education loans, vehicle financing, consumer durables, personal loans, credit cards, and microfinance.
As of FY25, the total retail credit in India stood at Rs. 82 trillion, reflecting a strong CAGR of 15.1 per cent between FY19 and FY25. In FY25 alone, retail credit grew by 14 per cent, backed by consistent demand in key asset segments like housing and auto.
Consumption-led surge in credit card usage
Additionally, the consumption-led growth in credit card usage and personal loan demand also played a significant role in this growth.
The report also showed a substantial gap in retail credit penetration in India. As of calendar year 2024, India’s household credit-to-GDP ratio stood at 42 per cent, significantly lower than China’s 60 per cent, the United States’ 69 per cent, and the United Kingdom’s 76 per cent.
This indicated vast potential for further credit growth in India, especially in underserved segments.
Moreover, India’s overall credit-to-GDP ratio was 93 per cent in CY2024, compared to 138 per cent for the United Kingdom and 198 per cent for China. This further pointed out the headroom available for credit expansion in the country.
The report also showed that growing financial awareness, government initiatives aimed at financial inclusion, and improved access to credit for the underserved population are expected to boost credit penetration. The surge will primarily be led by retail credit, creating an expansive opportunity for financial institutions to grow.
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