A recent press report said that Indian banks’ credit to non-bank financial companies (NBFCs) has increased extremely in the month of July as lenders showed more preference to less-regulated sector as loan demand from corporate has slowed down.
Reports said that the credit growth to NBFCs stood at 55.6 percent on a year-on-year basis in July, which is significantly higher than 10.9 percent in the corresponding period last year.
According to the report a top official of a state-run bank said that credit growth is somewhat muted in banks, and the NBFCs are in need of more funds and so due to the muted credit growth the banks are willing to offer loans to NBFCs.
Reports said that the advances to the commercial real estate sector have increased by 17.1 percent on year in July, jumping from 2.4 percent in the previous year and in June, the loans to sector has increased 23.2 percent.
The NBFCs in India offer small loans to consumers and businesses but do not have the same capital requirements and sectoral exposure limits as banks.