Non-banking finance companies’ (NBFCs) gross non-performing asset ratio (GNPA) may rise to 5.8 per cent from 2.9 per cent in March 2025 in case of a severe stress scenario, according to the Reserve Bank of India’s (RBI) financial stability report on Monday.

“Under the baseline scenario, the system level GNPA ratio of the sample NBFCs may rise from 2.9 per cent in March 2025 to 3.3 per cent in March 2026. Consequently, their aggregate CRAR (capital adequacy ratio) may dip to 21.4 per cent in March 2026 from 23.4 per cent in March 2025,” stated the report.

Under the baseline scenario, 10 NBFCs – all in the middle layer – may breach the regulatory minimum capital requirement of 15 per cent. Further, under the medium and severe risk scenarios, income loss and additional provision requirements may further reduce the CRAR compared to the baseline by an additional 80 basis points (bps) and 100 bps, respectively.

Sample of 158 NBFCs

Under the high-risk scenario, 15 NBFCs (all in the middle layer) may not be able to meet the regulatory minimum capital requirement. The RBI conducted stress test on NBFCs based on a sample of 158 NBFCs over a one-year horizon. These NBFCs had total advances of ₹26.94 lakh crore as of March 2025 – or 95 per cent of the total advances of non-government run NBFCs.

The report added that reliance of NBFCs on bank funding has decreased over the last year as the impact of higher risk weight on bank lending to NBFCs played out. Dependence of upper layer NBFCs on bank borrowings and public deposits was higher than middle layer NBFCs, it noted.

Overall, the credit growth of NBFCs rose to 21 per cent year-on-year (y-o-y) in March 2025 from 16 per cent in September 2024, but remained lower than the level observed in September 2023.

Published on June 30, 2025