New Delhi [India], September 10 : Outstanding bank credit as of July 2026 is 3.7 times that of non-banking financial company (NBFC) credit, with bank lending expanding at a much steeper pace, according to a report by Bank of Baroda.
The report noted that NBFCs account for 21.3 per cent of the total credit offtake across banks and non-bank lenders, marginally up from 21.2 per cent in June 2026. The sharper pace of bank credit growth highlights persistent reliance on bank borrowing as a primary source of financing across the economy.
"In terms of shares, Banks have a well-diversified portfolio with share of retail loans at 32.5%, followed by services at 28.1% and industry at 21.7%," the report said.
"For NBFCs, there is relatively higher concentration in retail loans whose share in overall NBFC credit is 43.5%, within which housing loans have a higher share at 14.3% in NBFC credit," the report stated.
Within the retail segment, vehicle loans make up 10.5 per cent of total NBFC credit, compared to 3.5 per cent for banks. Industry accounts for 36.9 per cent of NBFC credit, led by infrastructure at 33.7 per cent and the power sector at 24 per cent, establishing non-bank lenders as major infrastructure financiers.
The services sector, however, remains dominated by banks. Outstanding bank credit to the services sector, excluding loans to NBFCs, stood at Rs 40.7 lakh crore in July 2026, whereas NBFC outstanding credit to the sector was Rs 7.7 lakh crore. Services credit grew 22.9 per cent for banks against 15.2 per cent for NBFCs, with NBFC credit to trade losing momentum amid geopolitical disruptions.
"The major divergence in growth rate between Banks and NBFC is seen in case of industry where Banks are regaining their momentum," the report added. "For both infrastructure and power, Bank credit is growing at a faster pace of 10.2% and 21.6%, respectively, compared to NBFCs growth rate of 6.2% and 6.9%." 
In the retail lending segment, NBFC credit expansion outpaced banks with a growth rate of 21.4 per cent, supported by consumer durable financing due to wider distribution and market penetration. Housing loan demand remained buoyant across both lender categories.
Gold loan portfolios expanded sharply across both segments. Outstanding loans against gold jewellery stood at Rs 5.5 lakh crore for banks, reflecting an 88.1 per cent growth rate in July 2026, compared to Rs 3.5 lakh crore for NBFCs, which grew 68.5 per cent. 
The report noted that this buildup of credit requires monitoring. Commercial real estate credit also saw strong accretion, reaching Rs 6.7 lakh crore for banks against Rs 1 lakh crore for NBFCs.