MF Exposure To NBFCs Continues To Rise In June, Bank Advances Moderate: CareEdge

CareEdge Research Report

Mutual Fund debt exposure to NBFCs, including Commercial Papers and Corporate Debt, remained above the Rs 2 lakh crore mark for the third consecutive month touching Rs 2.21 lakh crore in June 2024. This marks an increase of 36.1% YoY and 5.6% sequentially, with CPs consistently remaining above the one lakh crore mark for seven consecutive months, standing at Rs 1.23 lakh crore (near to the Rs 1.27 lakh crore last witnessed in November 2018 i.e. nearly 6 years ago).

The credit exposure of banks to NBFCs stood at Rs 15.5 lakh crore in June 2024, indicating a 8.5% YoY growth. This growth is despite HDFC’s exposures being reclassified after its merger with HDFC Bank.

Without considering the merged entity in the base data, the growth stood at 17.2%. On a month-on-month basis, the amount fell by 0.8%. Meanwhile, the proportion of NBFC exposure in relation to aggregate credit has reduced from 9.9% in June 2023 to 9.2% in June 2024.

In June 2024, mutual funds' debt exposure to NBFCs increased to 14.2% of "Banks' advances to NBFCs," up from 11.4% in June 2023 and 13.3% in May 2024.

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