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Moody’s on NBFC Retail NPAs for FY26

26 September 20251 min read
BANKING & FINANCEMoody’s on NBFCRetail NPAs forFY2626 September 2025safalsetu.com

Why in the news

Moody’s Ratings forecast a modest rise in retail bad loans at Indian NBFCs in FY26, as lending outpaced nominal GDP growth.

Key facts

  • Rise: 20-30 basis points, from credit growth and vehicle loans.
  • Ceiling: below the pandemic peak of over 5% in FY22; strong macro conditions should keep quality steady.
  • GST reforms: may lift vehicle loan demand; risks are weaker collateral values and borrower cash-flow stress.
  • RBI in FY24: raised risk weights on unsecured loans and on bank loans to NBFCs.

Exam angle

  • Agency: Moody’s Ratings.

Test yourself

1. Which agency projected a 20-30 bps rise in NBFC retail NPAs for FY26?

Moody's Ratings made the projection.

2. The expected FY26 NBFC retail NPA level stays below the pandemic peak of over what percentage?

The pandemic peak in FY22 was over 5%.

3. In FY24 RBI raised risk weights on which kind of loans?

RBI raised risk weights on unsecured loans and bank loans to NBFCs.