Funding by MFs to NBFCs inflation nearly 47% to Rs 2.33 trillion in October 2024

Funding raised by non-banking financial companies (NBFCs) from mutual funds (MFs) grew nearly 47 percent year-on-year (Y-o-Y) to Rs 2.33 trillion in October 2024. Sequentially, funding support by MFs to NBFCs increased by 0.3 percent compared to September, according to CARE Ratings.

Mutual funds (MFs) credit exposure to NBFCs, which includes commercial paper (CP) and corporate debt, has remained above Rs two trillion for more than half a year now. Moreover, CP has remained above the one trillion mark for almost a year, currently at Rs 1.22 trillion.

Banks’ credit exposure to NBFCs stood at Rs 15.4 trillion in October 2024, showing a growth of 6.4 per cent year-on-year. On a month-on-month (m-o-m) basis, the amount increased by 0.5 percent. However, the proportion of NBFC exposure relative to total loans declined from 9.4 per cent in October 2023 to 8.9 per cent in October 2024.

In October 2024, mutual funds’ credit exposure to NBFCs remained sequentially at the same level, rising from 11.0 per cent in October 2023 to 15.2 per cent of banks’ advances to NBFCs.

After the RBI’s increase in risk weight on bank loans to NBFCs in November 2023, the share of exposure by banks to NBFCs has remained sequentially the same till October 2024.