Overall loan growth by non-banking finance companies crawled in Q4, growing just 2% annually during the quarter.
Both semi-urban and urban sectors reported lower growth in the fourth quarter of 2023. It was the loans in the rural areas that practically kept NBFCs afloat, according to data from the Finance Industry Development Council and credit bureau CRIF.
A de-growth in home loans and unsecured personal loans pulled down top NBFCs’ aggregate numbers in the fourth quarter. The fall was in spite of a strong growth in loans against property and gold loans.
NBFCs sanctioned Rs 4,46,132 crore worth of loans in Q4FY23, the data showed. This compares to Rs 4,38,344 crore in the corresponding quarter of the previous financial year.
The non-bank lenders approved Rs 87,102 crore of home loans in Q4FY23, which was 1% lower than Rs 88,225 crore sanctioned in the corresponding quarter last year.
Gold loan sanctions, however, jumped 24% to Rs 50,958 crore compared to Rs 41,156 crore. Property loans, too, were up 29% at Rs 45,284 crore compared to Rs 29,016 crore last year.
Of the total loans, loans to rural areas amounted to Rs 1,19,549 crore, which was 10% higher than Rs 1,08,248 crore in the fourth quarter in fY22. As against this, sanctions in the urban areas stood at Rs 2,78,050 crore, a decline of 1% from Rs 2,79,945 crore in Q4FY22. Semi-urban areas also shrank 5% to Rs 50,427 crore, ToI’s Mayur Shetty reported.
For the full year, total sanctions in FY23 stood at Rs 16,93,286 crore, 23.9% higher than Rs 12,87,484 crore in FY22. In absolute terms, sanctions were higher by Rs 4,05,802 crore than the previous year.
It may be noted that NBFCs raise most of their funds for lending from banks. RBI’s data on sectoral deployment of bank credit shows that outstanding bank loans to NBFCs grew 28% to Rs 13.1 lakh crore, an increase of Rs 3.8 lakh crore over the previous year. The total bank credit to NBFCs is almost the same as the incremental credit to the industry of Rs 4 lakh crore.
While NBFCs are key intermediaries in last-mile finance for retail, they also compete with banks. RBI data shows that bank loans for personal finance grew 20.6% in FY23 to Rs 40.8 lakh crore, an increase of 10.7 lakh crore from the previous year. This was driven by a 35% increase in consumer finance loans and a 15% growth in home loans.
