Bank Lending Surges, Outpaces NBFCs with Steep Credit Growth

A Bank of Baroda report reveals that bank credit outpaces NBFC credit significantly, highlighting banks' robust lending pace. Banks' credit portfolio is diverse, with rapid growth in retail and service sectors, while NBFCs focus more on retail and infrastructure. Both sectors saw notable growth in gold loan portfolios.

According to a report from the Bank of Baroda, the rate of bank credit expansion as of July 2026 is 3.7 times higher than that of non-banking financial companies (NBFCs). The report reveals NBFCs account for 21.3% of the total credit across banks and non-bank lenders, a slight increase from June 2026.

The report details banks' diversified portfolio, with retail loans making up 32.5%, services at 28.1%, and industry at 21.7%. Conversely, NBFCs show a higher concentration in retail loans at 43.5%, including a notable 14.3% for housing loans. Vehicle loans for NBFCs stand at 10.5%, while banks lend 3.5% in this segment.

Industry forms 36.9% of NBFC credit, prominently featuring infrastructure and power sectors. Bank credit to services, excluding NBFC loans, grows by 22.9% to Rs 40.7 lakh crore, compared to NBFCs' 15.2% growth. Banks maintain momentum in infrastructure and power lending, outpacing NBFCs' growth rates. Both sectors see a surge in gold loan demand, with significant growth percentages recorded.