SYNOPSIS: RBI’s Banking Report 2024-25 highlights strong NBFC growth and improving asset quality, but flags rising stress in microfinance, keeping NBFC-MFI stocks in focus amid cautious investor sentiment. On 29th December, the Reserve Bank of India (RBI) released a report on Trend and Progress of Banking in India 2024-25, presenting a comprehensive assessment of the […]
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SYNOPSIS: RBI’s Banking Report 2024-25 highlights strong NBFC growth and improving asset quality, but flags rising stress in microfinance, keeping NBFC-MFI stocks in focus amid cautious investor sentiment.
On 29th December, the Reserve Bank of India (RBI) released a report on Trend and Progress of Banking in India 2024-25, presenting a comprehensive assessment of the performance of the banking sector. The report covers commercial banks, co-operative banks and non-banking financial institutions, reviewing developments during FY25 and trends observed so far in FY26.
A key takeaway from the report was the strong performance of non-banking financial companies (NBFCs). The sector continued to record double-digit credit growth along with robust capital buffers, with asset quality also improved in FY25.
The combined balance sheet of NBFCs expanded by 18.9 percent to Rs. 61.09 lakh crore as of March 2025, compared with Rs. 51.39 lakh crore in March 2024. This growth continued into FY26, with the balance sheet rising a further 7.2 percent to Rs. 65.51 lakh crore by September 2025. Profitability trends were mixed.
Net profit of upper-layer (UL) NBFCs increased to Rs. 48,873 crore in March 2025 from Rs. 38,618 crore a year earlier, and stood at Rs. 27,012 crore for the six months ended September 2025. However, total profits for the entire NBFC sector declined to Rs. 1.32 lakh crore in FY25, down from Rs. 1.4 lakh crore in FY24.
The RBI noted that NBFC balance sheets continued to grow at end-March 2025, largely driven by robust expansion in loans and advances. Key indicators such as capital adequacy and asset quality remained strong, although there was some moderation in return on assets. While NBFCs reduced their reliance on bank borrowings, banks continued to remain a significant source of funding for the sector.
Asset quality across the NBFC sector showed improvement during the year. The gross non-performing asset (GNPA) ratio declined to 2.9 percent at end-March 2025 from 3.5 percent a year earlier, while the net NPA (NNPA) ratio also eased, reflecting better recoveries and adequate provisioning.
However, there’s one segment that remained an outlier for RBI, the microfinance segment. While microfinance serves as an effective instrument for advancing financial inclusion by providing small-ticket credit to underserved and unbanked populations, asset quality in this segment deteriorated during the year.
The GNPA ratio for NBFC-MFIs rose sharply to 4.1 percent at end-March 2025 from 2 percent a year earlier, while NNPA increased to 1.2 percent from 0.6 percent. The RBI attributed this trend to “underlying stress” and recovery challenges in the segment. By end-September 2025, GNPA and NNPA ratios for the NBFC sector remained broadly unchanged from March levels.
The report also highlighted progress under the Self-Help Group – Bank Linkage Programme (SHG-BLP), which has evolved into the world’s largest microfinance movement aimed at extending formal savings and credit to rural households. The number of SHGs accessing bank credit rose to 55.6 lakh in FY25, up from 54.8 lakh in the previous year. However, loan disbursements moderated slightly due to lower lending in the southern region.
As of end-March 2025, SHG savings balances with banks increased by 9.7 percent to Rs. 0.7 lakh crore, while outstanding bank loans to SHGs grew by 17.2 percent to Rs. 3 lakh crore, underscoring continued traction in grassroots-level credit.
Against this backdrop, below are a few listed microfinance institutions are expected to remain in focus during the trading session on Tuesday, 30th December, as investors assess the implications of the RBI’s findings on the sector:
With a market cap of Rs. 19,857 crores, the stock hit an intraday low at Rs. 1,236.45 on Tuesday, down by around 3.3 percent, as against its previous closing price of Rs. 1,278.8 on BSE.
CreditAccess Grameen Limited is registered as a non-deposit accepting NBFC-Microfinance Institution with the RBI. It is engaged in the business of providing microfinance services to women who are enrolled as members and organised as Joint Liability Groups. It also uses its distribution channel to provide certain other financial products and services to the members.
Satin Creditcare Network Limited
With a market cap of Rs. 1,580 crores, the stock hit an intraday high at Rs. 143.35 on Tuesday, up by around 1 percent, as against its previous closing price of Rs. 142.45 on BSE.
Satin Creditcare Network Limited is a non-deposit accepting Non-Banking Financial Company (NBFC-ND) and is registered as a Non-Banking Financial Company – Micro Finance Institution (NBFC-MFI) with the Reserve Bank of India (RBI) in November 2013. It is engaged primarily in providing micro finance services to women in the rural areas of India who are enrolled as members and organised as Joint Liability Groups (JLG).
Along with its subsidiaries, the company is engaged in the business of providing long-term finance to individuals, companies, corporations, societies or associations of persons for the purchase/construction/repair and renovation of new/existing flats/houses for residential purposes.
Spandana Sphoorty Financial Limited
With a market cap of Rs. 1,914.5 crores, the stock hit an intraday low at Rs. 266 on Tuesday, down by over 2 percent, as against its previous closing price of Rs. 271.95 on BSE.
Spandana Sphoorty Financial Limited was registered as a non-deposit accepting non-banking financial company (NBFC-ND) with the Reserve Bank of India (RBI) and got classified as a non-banking financial company – micro finance institution (NBFC-MFI) effective April 2015.
The company is primarily engaged in the business of lending, providing small-value unsecured loans to low-income customers in semi-urban and rural areas. The tenure of these loans is generally spread over 1-2 years.
With a market cap of Rs. 2,872 crores, the stock hit an intraday low at Rs. 167.35 on Tuesday, down by nearly 2 percent, as against its previous closing price of Rs. 170.05 on BSE.
Muthoot Microfin Limited is classified under “Middle Layer” and is registered as a non-deposit accepting Non-Banking Financial Company (NBFC-ND). Its operations are based on the Grameen model of lending and are designed to promote entrepreneurship among women and inclusive growth. It is primarily engaged in providing financial assistance through microloans to women engaged in small income-generating activities.
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