Outstanding loans in the the NBFC sector grew 27 percent year-on-year, the sharpest jump among all the sectors in industry and services.
Loans to non-banking finance companies (NBFCs) formed nearly 40 percent of all new corporate loans from banks in FY18, according to a report citing RBI data.
Bank loans outstanding to corporates rose by Rs 2.68 lakh crore in FY18, of which Rs 1.05 lakh crore or 39.3 percent were to NBFCs, according to the report.
Hardening of bond yields was one of the reasons why some companies shifted to bank borrowings from the commercial paper (CP) route. NBFCs are among the largest segment of borrowers in the money markets.
Overall, banks loans outstanding to corporates saw a rise of 6 percent year-on-year to Rs 47.5 lakh crore on March 30.
Outstanding loans in the NBFC sector grew 27 percent YoY, the sharpest jump among all the sectors in industry and services.
Sluggish investor environment in private companies could be a reason for an increase in lending to NBFCs, the report adds.
After GST implementation, there was an expectation that loan growth would recover, but that did not happen, the report says, citing a note by Kotak Institutional Equities (KIE).
The data suggests that retail loans are growing at a faster rate than what is reflected directly. This is because most NBFCs focus on small-ticket and MSMEs.