MUMBAI: A Notable Decline in NBFC Loan Sanctions

The second quarter of FY25 witnessed a significant downturn in loan sanctions by non-bank finance companies (NBFCs), with a 13% year-on-year decrease to approximately Rs 7.8 lakh crore. This decline was influenced by a sharp reduction in gold loans, loans against shares, and unsecured business loans.

Sequentially, the decrease was marginal at 0.3%, from Rs 7.82 lakh crore. The RBI's restrictions on top-up and unsecured loans, along with limitations on gold loans by a major finance company, played a pivotal role in this downturn, although the latter restriction was lifted in the subsequent quarter.

Sector-wise Impact and Regional Variations

Urban loan sanctions faced a steep 23% decline, highlighting a contraction in metropolitan lending activities. Commercial vehicle and education loans also saw reductions of 8.7% and 10%, respectively, indicating sector-specific challenges. Loans against securities and long-term loans experienced significant drops of 18% and 50%, reflecting a shift in financial institutions' risk appetite and consumer borrowing trends.

Conversely, semi-urban and rural areas witnessed modest growth in loan sanctions, suggesting a divergence in regional financial dynamics.