Prospects remain healthy for NBFCs, bank credit shows a strong trend

Topline growth should outweigh any pressure on margins

While rising interest rates and tighter liquidity are giving negative signals for the financial sector, increasing economic activity could mean higher business volumes for lenders.

Liquidity in the banking system has moved from Rs 8 trillion surplus into a deficit of Rs 33,000 crore over the 2022 calendar year. By the end of November, bank credit had grown 17.5 per cent YoY (year-on-year). Policy rates have risen by 225 basis points (bps). 

What is the impact on non banking financial companies or NBFCs? They have higher cost of funds compared to commercial banks and their lending patterns are on the