The slowdown in the fourth quarter was due to a de-growth in home loans and unsecured personal loans, despite strong growth in gold loans and loans against property.
According to data released by the Finance Industry Development Council and credit bureau CRIF, NBFCs sanctioned Rs 4,46,132 crore worth of loans in Q4FY23 compared to Rs 4,38,344 crore in the corresponding quarter in FY22.
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. However, gold loan sanctions 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 119549 crore, which was 10% higher than Rs 108248 crore in the fourth quarter in fY22. As against this, sanctions in the urban areas stood at Rs 278050 crore, a decline of 1% from Rs 279945 crore in Q4FY22. Semi-urban areas also shrank 5% to Rs 50427 crore.
For the full year, the FDIC data showed that total sanctions in FY23 stood at Rs 1693286 crore, 23.9% higher than Rs 1287484 crore in FY22. In absolute terms, sanctions were higher by Rs 4,05,802 crore than the previous year.
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 are also competing 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.
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