NBFC Credit Growth Accelerates to 14.9% in July 2026

Retail lending expands 21.4%, while gold loans remain the fastest-growing segment at 68.5%

Credit extended by Non-Banking Financial Companies (NBFCs), including housing finance companies, grew 14.9% year-on-year to Rs 59.9 lakh crore as of July 31, 2026, according to CareEdge Ratings. The outstanding credit increased by around Rs 7.8 lakh crore over the previous 12 months, with retail lending emerging as the main contributor to overall growth.

Retail credit grew 21.4% year-on-year, raising its share of the NBFC credit book to 43.5%, compared with 41.2% in July 2025. In comparison, industry credit grew 7.4%, while gold loans recorded the fastest growth among major retail segments at 68.5%.

NBFC Credit Growth Reaccelerates

NBFC credit growth increased from 10.6% in July 2025 to 14.9% in July 2026, representing an increase of nearly 430 basis points over the year.

Outstanding NBFC credit rose from Rs 52.1 lakh crore in July 2025 to Rs 59.9 lakh crore in July 2026. On a sequential basis, credit expanded by around 1.0% in July 2026.

The report attributes the acceleration to easing systemic liquidity, moderating funding costs for well-rated NBFCs and a broader recovery in retail credit demand.

Vineet Jain, Senior Director, CareEdge Ratings, said:

"NBFC credit grew 14.9% y-o-y to Rs 59.9 lakh crore as of July 31, 2026, up sharply from 10.6% a year earlier, led by resilient retail demand and deeper penetration of asset-backed products such as housing, vehicle and gold loans. Within infrastructure financing, NBFCs retained a larger credit base than banks, although bank infrastructure credit grew faster at 10.2% y-o-y compared with 6.2% for NBFCs. Going forward, performance will be contingent on disciplined underwriting, reliable funding sources, and adequate portfolio diversification, particularly given emerging downside risks: the potential impact of El Niño on rabi-season output and rural cash flows, as well as the risk that elevated crude prices and an extended West Asia crisis could lead to a steeper interest-rate trajectory,"

Retail and Industry Account for More Than 80% of NBFC Credit

NBFC retail credit increased to around Rs 26.1 lakh crore in July 2026 from Rs 21.5 lakh crore a year earlier. Its share of total NBFC credit consequently increased to 43.5% from 41.2%.

Industry credit stood at Rs 22.1 lakh crore, with its share declining to 36.9% from 39.5% in July 2025. The slower growth in industrial and infrastructure lending reflects weaker demand for large-ticket loans and increased competition from banks for prime corporate borrowers.

Services accounted for 12.8% of NBFC credit, while agriculture and other loans represented 1.3% and 5.4%, respectively.

The portfolio composition indicates greater emphasis on asset-backed retail lending, particularly gold loans and consumer finance, alongside slower growth in large-ticket industrial and infrastructure financing.

Gold Loans Lead Retail Credit Growth

Gold loans remained the fastest-growing major retail segment, with outstanding credit reaching Rs 3.5 lakh crore in July 2026. The segment grew 68.5% year-on-year, although growth moderated from 73.8% in March 2026.

Gold loans also recorded the strongest sequential growth among the retail segments, increasing 3.7% month-on-month. Higher gold prices increased the collateral value of pledged jewellery and supported demand for gold loans as a source of liquidity.

Consumer durables financing also recorded strong growth of 51.5% year-on-year, compared with 18.8% a year earlier. Other retail loans grew 20.4%.

Housing loans grew 11.9%, while vehicle finance increased 15.1%.

Housing Credit Grows Across Banks and NBFCs

Housing credit growth remained broadly balanced between banks and NBFCs.

Bank housing credit increased 11.4% year-on-year to Rs 34.3 lakh crore in July 2026, while NBFC housing credit grew 11.8% to Rs 8.5 lakh crore.

Banks accounted for around 80% of the combined housing-credit market, broadly unchanged from a year earlier. Housing's share of overall credit declined to 15.6% for banks from 16.7% and to 14.2% for NBFCs from 14.6%.

NBFC Industry Credit Growth Moderates

NBFC credit to industry grew 7.4% year-on-year in July 2026, compared with 9.3% a year earlier.

Infrastructure credit, which represents the largest component of industry credit, grew 6.2%. Within infrastructure, power-sector credit growth declined to 6.9% from 12.3%. Other infrastructure credit grew 4.7%, compared with a marginal contraction of 0.7% a year earlier.

Other industry credit grew 20.7% year-on-year, although this was lower than the 24.0% growth recorded a year earlier. The segment includes lending to mid-sized manufacturing companies and industrial working-capital requirements.

NBFCs Maintain Larger Infrastructure Credit Base

Bank participation in infrastructure financing increased, with bank infrastructure credit growing 10.2% year-on-year to Rs 15.1 lakh crore. NBFC infrastructure credit grew 6.2% to Rs 20.2 lakh crore.

Despite faster growth in bank infrastructure credit, NBFCs continued to have a larger infrastructure credit base. Bank growth was supported by 21.6% growth in power-sector credit, while lending growth to roads and telecommunications remained subdued.

The comparison excludes specialised lenders such as NaBFID, an RBI-regulated AIFI, from the NBFC comparison. Including AIFIs, the non-bank financing base remains larger than that of banks.

Services Credit Growth Slows

NBFC credit to the services sector grew 15.2% year-on-year to Rs 7.7 lakh crore in July 2026, compared with 24.5% a year earlier.

Commercial real estate was the main growth driver, with credit growth accelerating to 22.3% from 10.0%. However, outstanding commercial real estate credit declined 7.1% month-on-month.

Trade credit and lending to transport operators grew 14.7% and 10.7%, respectively. Credit growth in other services moderated to 15.8% from 37.6% a year earlier.

Agriculture Credit Records Faster Growth

Agriculture credit represented only 1.3% of the NBFC loan book, but grew 18.0% year-on-year in July 2026, compared with 5.4% a year earlier.

The other loans category, which includes non-housing HFC credit and lending by smaller NBFCs, grew 19.7% year-on-year, compared with a 20.5% decline a year earlier. The report notes that the increase may partly reflect a low base and changes in loan classification.

CareEdge Ratings Highlights Retail Lending Trends

According to Saurabh Bhalerao, Director, CareEdge Ratings:

“The shift towards retail and asset-backed lending is likely to remain a key growth driver for NBFCs through the rest of FY27. The increasing contribution of gold, housing and vehicle finance provides some diversification from wholesale exposures, although the sharp acceleration in gold loans warrants closer monitoring of loan-to-value discipline and sensitivity to gold prices. With banks also increasing their participation in gold-loan financing, competitive intensity in the segment could rise further. Overall, while retail-led growth remains supportive, funding strategy and asset quality will remain important areas to watch as the portfolio mix continues to evolve.”