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MUMBAI: Bank lending to non-banking finance companies slowed sharply in April, with outstanding loans to the sector falling by Rs 25,512 crore to Rs 16.1 lakh crore. At the end of March 2025, bank credit to NBFCs stood at Rs 16.4 lakh crore, marking a modest growth of 5.7% in FY25.

This was significantly lower than the overall bank credit growth of 11% during the year, to Rs 182 lakh crore, indicating a cooling in lending appetite toward shadow banks.

The slowdown in credit to NBFCs was part of a broader trend. Lending to large industries also moderated in April. The share of loans to large corporates declined to 15% of total bank credit, down from 16% at the end of March 2024. In comparison, housing loans now account for a larger share at 16.6%, underlining the shift in bank lending preferences toward the retail segment. Overall, the industry's share in total bank credit fell to 21.4% from 22% a year ago.

Bank loans to individuals against gold jewellery continued to grow adding Rs 3,427 crore during April 2025 taking the total outstanding to Rs 2.2 lakh crore. In FY24, bank loans against jewellery had risen 103% to Rs 2.08 lakh crore a large part of which was due to reclassification of gold-backed agri loans.

Data from 41 major scheduled commercial banks, which account for about 95% of all non-food credit, showed that year-on-year bank credit growth stood at 12% in the fortnight ended March 21, 2025. This was lower than the 16.3% growth recorded in the same period last year, reflecting a broad deceleration in credit expansion.