NBFC Loan Growth Climbs to 15.4% in September 2026 Driven by Retail and Farm Lending
Credit disbursals by non-banking financial companies (NBFCs) and housing finance companies (HFCs) gained momentum at the end of the second quarter. According to provisional data on sectoral deployment released by the Reserve Bank of India (RBI), credit extended by NBFCs expanded by 15.4% year-on-year in September 2026, marking an acceleration from the 13.3% growth recorded in September 2025.
The central bank’s dataset captures key entities across the Upper and Middle layers as well as registered HFCs, which collectively account for approximately 87% of the total outstanding NBFC credit in India. The trajectory highlights strong underlying momentum in consumer and rural borrowing, countering a noticeable cooldown in corporate infrastructure lending.
Retail and Rural Portfolios Lead the Surge
Household demand and festive-period credit pipelines helped retail lending emerge as the primary driver of growth. The retail advances portfolio across the shadow banking space expanded at an annual clip of 21.9% in September 2026, jumping from 16.8% in the year-ago period.
The central bank noted that credit acceleration in the retail basket was visible across key secured collateral categories:
- Housing Loans: Home mortgages continued to record robust expansion as housing demand stayed elevated in urban and semi-urban clusters.
- Loans Against Gold Jewellery: Borrowing against gold ornaments maintained rapid momentum, reflecting borrower appetite for quick-disbursal secured lines.
- Vehicle Financing: Auto and commercial vehicle loan disbursements maintained an upward trajectory, sustaining healthy ticket volumes ahead of peak festive demand.
Simultaneously, credit extended to agriculture and allied activities delivered a sharp uptick. Agriculture lending grew by 17.8% year-on-year in September 2026, compared with a modest 5.2% expansion in the corresponding period of the previous year, pointing to reviving rural cash flows and mechanisation finance.
Industrial Credit Moderates, Services Show Divergence
In contrast to consumer-facing credit, lending to the industrial sector witnessed a deceleration. Credit growth to industry slowed to 7.4% year-on-year in September 2026, down from 10.2% recorded in September 2025. The RBI highlighted that credit flow to the infrastructure segment remained subdued, indicating measured balance sheet expansion and refinancing selectivity by large shadow lenders.
Lending to the broader services sector moderated to 17.3% year-on-year in September 2026 from 23.0% in the previous year. However, performance remained bifurcated within services:
- Commercial real estate lending marked buoyant expansion, driven by commercial leasing projects and project debt demand.
- Trade financing and transport operator loans registered healthy growth, reflecting strong logistical and merchant activity.
Implications for Financial Markets
The sustained 15.4% credit print indicates that NBFC balance sheets remain well-positioned to intermediate credit despite higher funding costs in debt capital markets. For equity and debt investors, the sustained double-digit growth in retail portfolios underscores steady net interest margin profiles and asset quality stability in secured categories. While the softness in infrastructure financing poses a drag on wholesale book expansion, consumer-oriented NBFCs and HFCs continue to demonstrate solid volume expansion.
