Author
LoansJagat Team
Read Time
5 Min
20 May 2025
What if your next personal loan doesn't come from a bank? What if it's from a non-banking finance company and you don’t even visit a branch? That’s not just a possibility now. It’s already happening. By the end of 2025, most borrowers in India will move away from traditional banks and lean towards NBFCs.
NBFCs have started attracting borrowers at a pace banks can’t keep up with. The numbers say it all. As of December 2024, the total NBFC credit in India was close to ₹52,00,000 crore. In just one year, this figure is expected to cross ₹60,00,000 crore.
That’s more than a ₹8,00,000 crore jump in under 12 months. The growth isn’t random. It’s backed by speed, flexibility, and tech that banks still don’t use right.
Earlier, NBFCs were limited to certain areas. Now, they’re active in every tier-II and tier-III city. Local kirana shop owners, salaried youth, gig workers – everyone has started trusting NBFCs more. You get fast loans. You get fewer documents. And you don’t need to wait for a bank manager's nod.
Let’s see what’s really pulling borrowers in.
NBFCs are making their biggest mark in retail lending. Compared to banks, NBFCs give loans faster and with less paperwork. Today, 48% of NBFC credit goes into retail, compared to only 34% for banks. This gap shows just how focused NBFCs are on individual borrowers.
Because India has changed, more people now borrow to buy phones, finance weddings, fund travel, or start small businesses. They don’t want to stand in line or wait days for an answer. That’s where NBFCs win.
Some approve in minutes, and disbursement happens in less than 48 hours.
Feature | NBFCs | Banks |
Loan approval time | 24 to 48 hours | 3 to 7 working days |
Paperwork needed | Very low | High |
Interest rate range | 12% to 15% | 10% to 13% |
Who gets approved | Salaried, gig, semi-salaried | Mostly salaried with CIBIL |
That 1-2% higher interest is fine for many people if they get quick cash in hand.
NBFCs that use mobile apps and web platforms have grown their base threefold in two years. One of the biggest players gave out 8.3 crore small loans worth ₹81,365 crore in just nine months. These aren’t big home loans. These are ₹5000 to ₹1,00,000 loans for emergency needs, marriage bills, repairs, or travel.
And guess what? Most borrowers repaid without delay, so trust is now shifting completely in favour of NBFCS.
Online NBFCs are no longer an option but often the first choice. With Aadhaar-based eKYC, digital signatures, and UPI-linked disbursement, most NBFCs can approve and send money in less than a day.
You don’t need to step out. You just fill a form. Upload PAN, Aadhaar. Use DigiLocker. And you’re set.
Let’s take a salaried employee earning ₹35,000 per month.
Details | NBFC Lending Path | Traditional Bank Route |
Loan Needed | ₹1,00,000 | ₹1,00,000 |
Documents Needed | PAN, Aadhaar | PAN, Aadhaar, Salary slips |
CIBIL Score | 630 accepted | Minimum 700 preferred |
Processing Time | 24 hours | 4-5 days |
Monthly EMI (13%) | ₹4,506 | ₹4,350 |
For just ₹156 extra per month, you avoid the 5-day wait. That’s why NBFCs get more traction daily.
These tools make it easy to lend even in areas where banks don’t have branches.
One of the biggest silent shifts has happened in business lending. MSMEs (micro, small and medium enterprises) and gig workers are moving fast towards NBFCs.
Banks still want 3 years of income proof, GST returns, audits, and what not. NBFCs don’t.
For example, a kirana store owner who wants ₹1,50,000 for expanding the shop can get it from NBFCs within 3 days. The same loan from a bank? Minimum 2 weeks.
Loan Type | NBFCs | Banks |
Documentation | GST or bank statement | Audits, returns, collateral |
Approval Speed | 2-3 days | 7-10 days |
Repayment Options | Weekly or monthly | Monthly |
Default Support | Moratorium, rollover | Limited support |
These are real benefits, not just promises.
NBFCs are expected to grow mainly in three sectors: Retail, Infrastructure and MSMEs.
Sector | Current Share in NBFC Lending | Growth Forecast FY25-FY26 |
Retail | 58% | 16% to 18% CAGR |
Infrastructure | 24% | 10% to 12% CAGR |
MSMEs | 21% | 12% to 14% CAGR |
These numbers are not random estimates. These are based on credit flow, demand, and tech use.
Also, most NBFCs now get funds from banks or issue their own bonds. This makes it easy for them to grow without liquidity issues.
So what happens next? Clearly, NBFCs will keep getting more borrowers. And banks may only serve big-ticket loans or ultra-safe profiles.
Borrowers now want three things:
NBFCs are ticking all these boxes. Their cost of operations is lower. Their customer support is better. And their use of AI and analytics makes lending more human.
Expect more innovation. More tie-ups with fintechs. And a shift of even salaried class to NBFCs for personal loans.
1. Can I take a loan from NBFC with a low credit score?
Yes. Most NBFCs now use alternate scoring methods. You can get loans even with 600 to 650 credit scores if your income is stable.
2. Is NBFC loan safe?
Yes. Registered NBFCs under RBI follow strict rules. Check if the NBFC is on RBI’s approved list before applying.
3. Are NBFC interest rates always higher than banks?
Not always. NBFCs offer competitive rates, especially for repeat borrowers and low-ticket loans under ₹1,00,000.
4. Can self-employed people apply for NBFC loans?
Yes. Even without formal ITR or audits, NBFCs approve loans for self-employed professionals and traders.
5. What if I miss EMI on an NBFC loan?
NBFCs often give flexible repayment options. You can opt for rescheduling or even moratorium for 1-2 months.
About the Author
LoansJagat Team
We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?
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