Mumbai, November 13, 2026: Bank credit to Non-Banking Financial Companies (NBFCs) surged 41.8% year-on-year to ₹22.5 lakh crore as of September 30, 2026, marking the fastest annual growth since December 2019, according to CareEdge Ratings. The increase represents an addition of ₹6.6 lakh crore in NBFC credit over the past year, about 1.5 times the ₹4.4 lakh crore added over the previous three years combined.
This expansion highlights the growing role of NBFCs in India’s formal credit sector. Over the past decade, bank credit to NBFCs has risen nearly six-fold, from ₹3.7 lakh crore in September 2016 to ₹22.5 lakh crore in September 2026, reflecting a compound annual growth rate (CAGR) of 19.8%. This compares with an 11.9% CAGR for overall bank credit in the same period. As a result, NBFCs’ share of gross bank credit increased to 9.8% in September 2026, up from 8.3% a year earlier and 4.9% in September 2016.
NBFCs’ share in incremental credit rises
CareEdge Ratings noted a significant shift in the credit mix, with NBFCs receiving approximately ₹18 of every ₹100 added to non-food bank credit in the 12 months to September 2026, compared to just ₹3 in the same period last year. NBFCs now account for nearly one-third of bank credit to the services sector and close to half of its incremental credit growth, underscoring their expanding role in credit intermediation.
The acceleration in bank lending to NBFCs has been attributed to a shift in funding preferences, as bond-market borrowing became costlier relative to bank loans. Borrowers reportedly front-loaded funding ahead of the October rate hike, and NBFCs increased borrowings to finance festive-season demand for vehicles, consumer durables, and gold loans. This follows a period of moderation after the November 2023 increase in risk weights on bank lending to NBFCs, which was rolled back in February 2025.
Structural shift in credit transmission
Vineet Jain, Senior Director – BFSI at CareEdge Ratings, said the sharp increase in bank lending to NBFCs points to a deeper structural shift in India’s financial system, with banks increasingly using specialised non-bank lenders to extend their reach. Jain added that as this interdependence deepens, the diversification and resilience of funding sources and the quality of underlying credit portfolios will become more important.
Growth expected to moderate
CareEdge Ratings expects year-on-year growth in bank credit to NBFCs to moderate as festive-led and front-loaded borrowing normalises and the low-base effect fades from October 2026. However, the agency anticipates that the absolute level of bank credit to NBFCs will remain higher, with funding concentration emerging as a key area to monitor.
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