NBFC-Retail (excluding HFCs) AUM growth is estimated at 18-20% YoY in FY2027. 

Credit costs would remain relatively elevated at 2.1-2.3% during FY2027. The renewed conflict in West Asia presents incremental downside risks to growth and asset quality.

The YoY growth in ICRA Business Activity Monitor (BAM) index accelerated to a 32-month high of 12.0% in June 2026 (+6.6% in June 2025) from 9.4% in May 2026 (+6.9% in May 2025), led by YoY improvement in as many as 13 of the 16 constituent indicators. This is likely on account of pick-up in economic activity after the temporary ceasefire between US and Iran from mid-June 2026 to early-July 2026. Further, the subdued rainfall in June 2026 (widest deficit in nearly 12 years) supported electricity generation and allowed an extended period for mining output and construction activity.

Source: ICRA Research