Shriram Finance, Muthoot Finance: NBFC stocks trade lower; here is what RBI said in latest bulletin

An RBI bulletin said on Wednesday the prospects for NBFCs in segments like vehicle loans and loans against gold appear robust, buoyed by improvements in vehicle sales and rising gold prices.

Observing that NBFCs play a vital role in India's economic growth, it said these institutions, by providing finance for infrastructure, vehicles, housing, and consumer goods, improve aggregate demand, create jobs, and contribute to economic expansion.

The growing contribution of NBFCs to credit, particularly to the industrial and retail sectors, is evident in their rising credit-to-GDP ratio, it said.

Moreover, the introduction of the Liquidity Coverage Ratio (LCR) is set to further bolster NBFCs' short-term resilience, it said.

As the financial sector increasingly adopts artificial intelligence and machine learning, NBFCs must remain vigilant and proactively address cyber challenges by leveraging these new opportunities effectively, it suggested.

In India, NBFCs continued to record double-digit credit growth as of the end of December 2024. This expansion is evident from a rising NBFC credit-to-GDP ratio sustained by lending to the industry and retail sectors, which continue to dominate their portfolio.

The bulletin noted that the NBFC sector remains robust in terms of various profitability and prudential indicators such as return on assets, return on equity, net interest margin, capital to risk-weighted assets and non-performing assets.

The spike in the growth rate of unsecured loans was contained through an increase in risk weights in November 2023, it said.

With regard to sources of finance, NBFCs continue to rely largely on bank borrowings and debentures. NBFCs' role in credit intermediation and interlinkages with banks and other financial institutions have implications for the transmission of monetary policy impulses to the financial sector and real economy, it said.

Empirical analysis points to the fact that there is monetary policy transmission to NBFCs' borrowing and lending rates, albeit incomplete, it said.

Shriram Finance

Shriram Finance reported an 8.83% rise in its net profit to ₹2,156 crore in the June quarter (Q1 FY26).

The non-banking finance company (NBFC) had a standalone net profit of ₹1,981 crore logged in the April-June quarter of 2024-25.

Total income rose to ₹11,542 crore in the April-June quarter of FY26, from ₹9,610 crore logged in the same quarter in FY25.

Muthoot Finance

Gold loan NBFC Muthoot Finance on Wednesday reported a 65% year-on-year (YoY) surge in its consolidated profit after tax to ₹1,974 crore for the three months ended June 2025.

In the same quarter last year, the company had posted a profit after tax of ₹1,196 crore.

Total income jumped 44% to ₹6,485 crore for the quarter under review from ₹4,492 crore registered in the April-June quarter of FY25, Muthoot Finance said in a regulatory filing.

Its loan assets under management increased 37% YoY to ₹1,33,938 crore in Q1 FY26 against ₹98,048 crore last year.

Bajaj Finance

Bajaj Finance, the country's largest non-banking finance company (NBFC), reported a consolidated net profit of ₹4,700 crore in the first quarter of the current financial year (Q1FY26), marking an upside of 20% from ₹3,912 crore in the same period last year.

Its net interest income (NII), the difference between interest earned and interest expended, advanced 22% in Q1 to ₹10,227 crore from ₹8,365 crore in the year-ago period.

Bajaj Finance's fees and commission income came in at ₹1,784 crore, up 17% from ₹1,524 crore in the corresponding period last year.

The Pune-based company's assets under management (AUM) jumped by 25% in Q1 to ₹4,41,450 crore and its assets under finance rose by 24% to ₹4,32,458 crore.

Loan losses and provisions increased by 26% in Q1FY26 to ₹2,120 crore from ₹1,685 crore in Q1FY25.

The number of new loans booked in the June quarter was 13.49 million as against 10.97 million in Q1FY25, a growth of 23%. Customer franchise stood at 106.51 million compared to 88.11 million in the year-ago period.