Indian non-banking finance companies recorded 14.2% year-on-year growth in loans in May 2026, marking the first time the Reserve Bank of India has revealed monthly data on sectoral credit growth for NBFCs. This represents a significant acceleration from the 11.4% growth recorded in May 2025, as reported by The Hindu BusinessLine and Business Standard. The robust performance is driven by strong retail lending and higher credit to agriculture, with the outstanding credit by major NBFCs and housing finance companies standing at ₹58.60 trillion at the end of May, compared with growth of 11.4% in the corresponding month last year. However, NBFCs' credit growth remains lower than scheduled commercial banks' non-food bank credit growth of 17.7% as of May 31, 2026, according to RBI data. The central bank has, for the first time, published data on the sectoral deployment of NBFC credit, providing unprecedented transparency into the sector's performance.
Retail loans emerged as the largest contributor to overall NBFC credit growth, rising 19.5% YoY to ₹25.2 lakh crore, compared with growth of 14.9% a year earlier, as per RBI data. Within the retail segment, housing loans grew 10.9% YoY to ₹8.35 lakh crore, more than double the 5.1% growth recorded in May 2025. Loans against gold jewellery remained the fastest-growing retail category, surging 70% YoY to ₹3.3 lakh crore, up from 39% growth a year earlier, driven by strong demand for secured borrowing amid elevated gold prices. Consumer durable loans also grew sharply by 42% to ₹68,814 crore, reflecting healthy consumption demand, while vehicle loans rose 14.8% to ₹6.18 lakh crore, according to The Hindu BusinessLine and Business Standard. Retail loans now account for nearly 43% of the sector's overall loan book, making them the dominant driver of NBFC growth.
Credit to agriculture and allied activities gathered pace significantly, rising 17.9% YoY compared with 5.0% growth a year earlier, according to RBI data. In contrast, credit growth to industry slowed to 7.3% from 10.0% in May 2025, primarily due to weaker growth in infrastructure lending. The RBI noted that moderation in industry growth was primarily driven by subdued growth in infrastructure, a major constituent of the segment. Credit growth in services sector moderated to 16.7% YoY from 23.9% a year earlier, with credit growth to transport operators and trade sectors declining, though loans to commercial real estate expanded by 40% YoY to ₹1.19 lakh crore, up from 10% growth a year ago. This sectoral shift reflects the continued strength of consumer-focused lending by NBFCs, with retail credit significantly outpacing lending to productive sectors such as industry.
The incremental expansion is strikingly concentrated, with NBFCs adding ₹84,544 crore between March and May 2026, a 1.5% increase that is roughly twice the pace of bank lending over the same period, as reported by The Times of India. Of this addition, retail loans accounted for ₹81,161 crore, taking the segment's outstanding stock to around ₹25.2 lakh crore. The deceleration in annual growth masks a pickup from 11.4% a year earlier, helped along by a surge in loans against gold jewellery, which expanded 6% in the two months to May and 70% year-on-year to ₹3.3 lakh crore. Banks typically see slower credit growth in the first quarter, as companies repay dues after year-end balance-sheet adjustments, making NBFCs' performance particularly notable during this period.
