NBFC-Retail (excluding HFCs) AUM growth is estimated at 16-18% YoY in FY2027. Incremental funding required (over and above refinancing of maturing debt) of Rs. 4.1-4.3 trillion in FY2027. Profitability of the NBFCs would remain healthy at 2.3-2.5% in FY2027.  The Retail AUM of NBFCs (NBFC-Retail; excluding HFCs3 ) expanded at 17% YoY in H1 FY2026, as growth was constrained amid asset quality pressures and macroeconomic uncertainties. ICRA expects the NBFC-Retail segment to grow at a moderate pace of 17-19% during FY2026 and 16-18% in FY2027. Within this, gold loans has been the most buoyant, driven up by gold prices. VF, PL/CL segments have also benefited from the GST rate cuts, which has spurred domestic demand as customers advanced their purchases.

Exhibit: Level of ICRA Business Activity Monitor (FY2019=100)