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Informist, Thursday, Sept. 25, 2025

 

NEW DELHI – The total flow of non-food bank credit and non-bank credit to the commercial sector increased to INR 35.09 trillion in 2024-25 (Apr-Mar) from INR 34.04 trillion the previous year, according to a staff paper in the Reserve Bank of India's bulletin for September. The fund flow was sharply higher than INR 27.22 trillion in FY23. The fall in bank lending was made up for through equity fundraising and non-bank finance companies expanding their share of credit, the paper said.

 

The largest percentage rise was in terms of funds garnered from the equity market at INR 3.81 trillion in FY25, nearly tripling on year. Non-financial companies raised about INR 2 trillion through initial public offerings, follow-on public offerings, or rights issues. Over INR 1 trillion was raised through qualified institutional placement, while the remainder was raised through preferential issues. 

 

This eclipsed the total funds raised through market sources in FY24, with the total rising to INR 6.3 trillion in FY25 from INR 3.6 trillion the previous year. Corporate bond issuances rose 18.2% on year to INR 1.98 trillion in FY25, while the issuance of hybrid instruments and commercial papers fell on year.

 

"In 2024-25, although the flow of credit from banks to the commercial sector moderated, the flows from non-bank sources more than offset the moderation in bank credit, resulting in a rise in flows to this sector," the paper, published Wednesday, said. "The moderation in bank credit flow in 2024-25 may be mainly attributable to a slowdown in credit to the targeted segments emanating from an increase in risk weights on unsecured credit in November 2023 aimed at strengthening financial stability."

 

The article in the monthly bulletin, titled 'Flow of Financial Resources to Commercial Sector in India during 2024-25' was co-authored by RBI staff across various departments. Comments in the article do not represent the views of the central bank.

 

Non-food credit flow fell to INR 18.0 trillion in FY25 from INR 21.4 trillion the previous year, as loans to "targeted" segments – the ones with higher risk weights – nearly halved to INR 2.4 trillion. As for non-banks, housing finance companies' commercial loans were marginally down on year at INR 1.35 trillion. Credit from non-banking finance companies grew 17.6% on year to INR 5.22 trillion in FY25.

 

The flows from non-bank foreign sources increased by 0.8 lakh crore (INR 800 billion) during the same period, primarily due to an increase in short-term credit from abroad, reflecting a rebound in India's merchandise imports, the paper said. Short-term credit from abroad rose to INR 588.60 billion from an outflow of INR 67.41 billion. Foreign direct investment rose 11.0% on year to INR 2.47 trillion in FY25.

 

On an outstanding basis, total credit from bank and non-bank sources to the commercial sector stood at INR 270.9 trillion, or 81.9% of GDP at end-March, up from INR 241.7 trillion, or 80.2% of GDP, at the end of March 2024, the paper said.  End

 

Reported by Aaryan Khanna

Edited by Tanima Banerjee

 

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