Credit extended by non-banking financial companies (NBFCs) grew by 14.2 per cent year-on-year in May 2026, up from 11.4 per cent in the corresponding month last year, with retail lending emerging as the biggest driver of overall credit expansion, according to data released by the Reserve Bank of India (RBI).
The central bank said NBFC lending activity remained resilient during the month, although the composition of credit growth shifted further towards retail and agriculture segments. While these sectors recorded stronger momentum, lending to industry and services witnessed a moderation compared with the previous year.
Credit to agriculture and allied activities posted the fastest growth among all major sectors, rising 17.9 per cent year-on-year in May 2026, a sharp improvement from 5 per cent growth recorded a year earlier. The RBI attributed the increase to stronger credit flow to the farm sector, highlighting continued support for agricultural and rural financing.
"Credit growth in agriculture and allied activities recorded a robust growth of 17.9 per cent (y-o-y) in May 2026 against 5.0 per cent a year ago," the RBI said in its release.
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Retail loans continued to account for the largest share of overall NBFC credit growth, expanding 19.5 per cent year-on-year in May 2026 compared with 14.9 per cent in the same month last year.
"Retail loans contributed the most in overall credit growth by NBFCs with 19.5 per cent (y-o-y) growth in May 2026," the central bank said. Within the retail portfolio, housing loans, vehicle financing and loans against gold jewellery recorded healthy growth, reflecting sustained consumer demand and continued borrowing across major retail credit categories.
In contrast, credit growth to the industrial sector slowed to 7.3 per cent in May 2026 from 10 per cent a year earlier. According to the RBI, the moderation was largely due to weaker lending to infrastructure projects, which account for a significant share of industrial credit extended by NBFCs.
Lending to the services sector also lost some momentum, with credit growth easing to 16.7 per cent year-on-year from 23.9 per cent in May 2025. Despite the broader slowdown, commercial real estate remained a bright spot, recording strong credit expansion and emerging as one of the key contributors within the services segment.
"Credit growth in services sector moderated to 16.7 per cent (y-o-y) in May 2026 against 23.9 per cent a year ago. Among major contributors, growth (y-o-y) in credit to 'Commercial Real Estate' marked buoyant expansion," the RBI said, indicating continued demand for financing in the property sector despite softer overall services lending.
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