Bank lending to non-banking finance companies surged 26% in the previous fiscal year, the fastest pace expected into FY26. The jump is linked to the Reserve Bank of India easing risk weights, making NBFC exposures less capital-intensive for banks. Looser regulatory norms and lower lending rates further boosted financing demand, reshaping credit flows.
The RBI has finalised new risk weight norms for certain retail loans. To qualify, lenders must extend credit to individuals or small businesses with turnover up to ₹500 crore, keeping loans within a ₹10 crore exposure cap per borrower. The loans must also be part of a diversified portfolio where no borrower exceeds 0.2% exposure, and the products must be standard retail categories.
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