In the first quarter of the current financial year (Q1FY25), loan sanctions by non-banking finance companies (NBFCs) in the country increased by 12% year-on-year, driven by strong growth in home, auto, and personal credit segments. However, sequentially, loan sanctions declined by 11% compared to the quarter ending March 2024 (Q4FY24), due to business seasonality, as reported by the Finance Industry Development Council (FIDC).
According to FIDC data, finance companies sanctioned loans totalling Rs 5.08 trillion during the April-June 2024 period, an increase from Rs 4.54 trillion in the same period the previous year (Q1FY24). FIDC serves as the industry lobby group for finance companies.
Construction equipment loans experienced a negative growth trend. However, most major categories demonstrated positive year-on-year growth, which is encouraging, FIDC stated in a release.
Gold loan sanctions increased by 26% to Rs 79,217 crore in Q2FY25, compared to Rs 62,834 crore in Q1FY24. Personal loan sanctions also grew by 12% year-on-year, reaching Rs 71,306 crore from Rs 63,494 crore in Q1FY24, according to FIDC.
In the housing segment, loan sanctions reached Rs 50,826 crore in Q1FY25, an increase from Rs 47,084 crore in Q1FY24. Auto loan sanctions rose to Rs 25,022 crore, up from Rs 22,823 crore in the same period last year. Consumer loan sanctions also grew, reaching Rs 34,466 crore in Q1FY25 compared to Rs 29,885 crore in Q1FY24.
K V Srinivasan, co-chairman of FIDC and CEO of Profectus Capital, mentioned to Business Standard that the April-June period is typically a soft quarter. However, there has been a positive trend in housing and auto loans, which is encouraging. A satisfactory monsoon and a soft rate regime are expected to boost capital expenditure and credit offtake in the second half. The Reserve Bank of India’s (RBI) stance on rates will also influence these trends. Additionally, RBI’s caution regarding growth and practices in certain loan segments is likely to lead to moderation in the unsecured credit and gold loan segments, Srinivasan added.