India's NBFC Sector Set For Robust Growth, AUM Seen Crossing Rs 50 Trillion

New Delhi, Jun 24 (KNN) India's non-banking financial company (NBFC) sector is expected to maintain robust growth, with assets under management (AUM) projected to exceed Rs 50 trillion by FY27, according to an analysis of annual reports by Equirus Securities.

This is driven by rising retail credit penetration, increasing formalisation and ongoing financial inclusion efforts.

Retail Lending Continues to Drive Growth

The report noted that NBFC credit expanded 16.7 percent year-on-year in FY26, highlighting the sector’s growing role in financing underserved segments. 

Retail lending remained the primary growth driver, accounting for nearly 57 percent of NBFC loan portfolios versus around 40 percent of the banking system’s credit. 

Equirus said NBFCs have strengthened their position by serving self-employed individuals, micro enterprises and informal-sector borrowers through specialised underwriting and distribution models, expanding access to formal credit. 

MSME Lending Emerges as a Major Opportunity

MSME lending also emerged as a major opportunity, with outstanding MSME credit across the financial system estimated at around Rs 51 trillion. 

MSME credit recorded a CAGR of 20.7 percent between FY22 and FY26, supported by greater formalisation, GST-based cash-flow assessments, digital lending platforms and government-backed credit schemes.

Consumer Durable Finance Gains Momentum

Consumer durable finance remained another key growth segment, expanding to nearly Rs 1.04 trillion by March 2026. 

NBFCs increased their market share in the segment to around 59 percent, aided by faster approvals, strong merchant partnerships, extensive point-of-sale networks and wider adoption of digital lending.

Regulatory Framework Strengthens Sector Resilience 

The report added that the regulatory environment for NBFCs strengthened further during FY26 under the RBI's Scale-Based Regulation framework, improving governance, risk management, disclosures and capital adequacy standards. 

Although some unsecured retail lending segments faced elevated stress, asset quality in productive segments such as MSME and consumer durable finance remained broadly stable.

Equirus Securities said favourable demographics, deeper credit penetration and rising demand from retail and MSME borrowers are expected to support sustained expansion of the NBFC sector in the coming years.

(KNN Bureau)