Non-banking financial companies recorded a 14.2% jump in credit growth in May, driven by strong retail and agriculture demand. Gold jewellery loans surged by nearly 70%, reflecting shifting consumer credit patterns. While retail and farm lending remained robust, credit growth to industries and services saw a slowdown compared to the previous year.
Non-banking financial companies (NBFCs) and housing finance companies reported an acceleration in credit growth to 14.2% year-on-year in May 2026, according to the latest Reserve Bank of India data. Total outstanding credit reached Rs 58.60 trillion, reflecting a notable increase from the 11.4% growth rate observed in the same month last year.
Retail and Gold Loan Surge
Retail lending remains the primary engine for this growth, expanding by 19.5% to reach Rs 25.19 trillion. Within the retail segment, gold jewellery loans have witnessed a sharp spike, growing by nearly 70% to Rs 3.30 trillion compared to 38.9% growth in the previous year. This suggests that households are increasingly leveraging gold assets for credit. Meanwhile, housing loans have also gained momentum, doubling their growth rate to 10.9% from 5.1% a year ago. Vehicle loans, which represent a significant portion of the retail book, grew at a steady 14.8%, although this was slightly lower than the 16.3% growth seen in May 2025.
Agricultural and Industrial Lending Trends
Credit to the agriculture sector has become a major contributor, rising 17.9% year-on-year, a significant improvement from the 5% growth recorded in the prior year. In contrast, lending to the industrial sector has decelerated to 7.3%, down from 10% in May 2025, largely due to a slowdown in infrastructure-related financing. The services sector also experienced a cooling effect, with growth moderating to 16.7% from 23.9% a year earlier. Despite this, commercial real estate lending remains a bright spot with continued healthy growth.
Funding Support from Banks
The ability of NBFCs to sustain this lending expansion is supported by easier access to bank funding. As of May 31, 2026, bank credit to the NBFC sector rose by 33.7% year-on-year to Rs 20.9 trillion, a sharp turnaround from the near-flat 1% growth recorded during the same period last year. This liquidity support allows NBFCs to continue aggressive lending, particularly in consumer-focused segments.
Investors may monitor whether the high growth in gold and retail loans continues to translate into stable asset quality for these companies. Additionally, the impact of slower industrial lending on the overall profit margins of NBFCs with large corporate books will be a key factor to track in upcoming quarterly results. While the current momentum is strong, the sector's reliance on bank credit means that any shifts in interest rates or banking liquidity policies could influence future lending capacity.