NBFC Balance Sheets Grow in FY25, Microfinance Stress Remains: RBI

The Reserve Bank of India has reported that non-banking financial companies (NBFCs) saw a notable expansion in their balance sheets during FY25, largely supported by sustained loan growth across retail and small business segments. However, the central bank cautioned that stress in the microfinance segment continues to pose challenges.

According to the RBI, credit demand remained strong through most of the year, allowing NBFCs to grow assets and expand their lending footprint. Retail loans, MSME financing and vehicle loans were key contributors to overall balance sheet growth.

Loan Growth Drives Expansion

NBFCs benefited from steady borrowing demand and improved access to funding, which supported higher disbursements. The RBI noted that asset quality remained broadly stable in most lending categories, reflecting prudent underwriting and tighter risk controls adopted after earlier sector-wide disruptions.

Larger NBFCs, in particular, continued to strengthen capital buffers and liquidity positions, helping them absorb market volatility and regulatory tightening.

Microfinance Stress Still a Concern

Despite overall growth, the RBI highlighted persistent stress in microfinance portfolios. Rising borrower indebtedness, uneven income recovery in rural areas and higher repayment pressures have weighed on asset quality in this segment.

The central bank stressed that while stress levels remain manageable, close monitoring is essential-especially for NBFCs with higher exposure to unsecured and small-ticket loans.

Importance of Financial Discipline

Regulators and analysts say that as NBFC balance sheets grow, maintaining transparency, strong governance and accurate financial reporting becomes even more critical. Periodic reviews aligned with auditing services in india help NBFCs identify emerging risks early, strengthen internal controls and remain aligned with evolving regulatory expectations.

Outlook for FY26

The RBI expects NBFC credit growth to remain resilient, supported by consumption demand and digital lending models. However, it cautioned that global uncertainty and domestic credit stress pockets could test risk management frameworks.

For NBFCs, the message is clear: growth opportunities remain strong, but sustaining momentum will depend on disciplined lending, prudent capital management and proactive oversight.