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NBFC Bank Credit Keeps Falling Despite RBI Relief

2 July 20251 min read
BANKING & FINANCENBFC Bank CreditKeeps FallingDespite RBI Relief2 July 2025safalsetu.com

Why in the news

Banks pulled back from NBFC lending even after the RBI eased its stricter risk-weight rules.

Key facts

  • Rising delinquencies in microfinance and fintech business loans.
  • Unsecured loans are closely watched.
  • Private banks have begun passing on the rate cut; PSBs lag.

Concerns

  • Lower-rated NBFCs depend on banks and large NBFCs, so face slower disbursements and costlier funds.
  • Growing reliance on bond markets.

Exam angle

  • Repo cut in April 2025: 50 bps.
  • Benchmark PSBs did not lower: MCLR.

Test yourself

1. Which NBFC rating band was described as worst hit by the funding squeeze?

NBFCs rated A- to BBB depend on banks and large NBFCs and are hit hardest.

2. What did many PSBs fail to cut despite the 50-bps repo reduction in April?

Many PSBs have not reduced MCLR.

3. Which two segments showed rising delinquencies, worrying banks about NBFC lending?

MFIs and fintech business loans saw delinquencies rise.