Mutual Fund (MF) debt exposure to NBFCs crossed the Rs 2 lakh crore mark after 55 months to reach Rs 2.08 lakh crore in April, highlighted a recent report by CareEdge Ratings.
This marks an increase of 29.8% y-o-y and 9.7% sequentially, with CPs remaining above the one lakh crore mark for five consecutive months.
Notably, the debt exposure also includes Commercial Papers (CPs) and Corporate Debt.
The CP outstanding stood at Rs 1.18 lakh crore equating to a level last witnessed in May 2019 i.e. nearly 5 years ago.
Credit exposure of banks to NBFCs
The credit exposure of banks to NBFCs stood at Rs 15.5 lakh crore in April 2024, indicating a 14.6% y-o-y growth. This growth is despite HDFC’s exposures being reclassified after its merger with HDFC Bank, the report said.
Without considering the merged entity in the base data, the growth stood at 25.5%.
On a month-on-month (m-o-m) basis, the amount rose by 0.4%. However, the proportion of NBFC exposure in relation to aggregate credit has reduced from 9.7% in April 2023 to 9.4% in April 2024.
Highlighting the relative size of their exposure to NBFCs, MFs’ debt exposure to NBFCs rose to 13.4% as a percentage of “Banks’ advances to NBFCs” in April 2024 from 11.9% in April 2023, and sequentially from 12.2% in March 2024.
Bank lending to NBFCs jumped 4x
The report highlighted that compared to February 2018 numbers, absolute bank lending to NBFCs has jumped to around 4x.
Meanwhile, MF exposure has reduced by 9.9% over six years. Interestingly, MF debt exposure to NBFCs, including Commercial Papers and Corporate Debt, crossed the Rs 2 lakh crore mark after 55 months.
Furthermore, MF exposure to NBFCs as a share of Debt Assets Under Management (AUM) has reduced from nearly 20% in the latter part of 2018 to around 14% by April 2024.
On the other hand, the share of banks’ advances to NBFCs as a share of aggregate advances doubled from around 4.5% in February 2018 to 9.4% in April 2024.
