MF funding to NBFCs grow at 30% to Rs 2.08 trn in April 2024: CareEdge

In April 2024, non-banking financial companies (NBFCs) raised nearly 30% more funds from mutual funds (MFs), totaling Rs 2.08 trillion, compared to the previous year, as per CareEdge data. This rise indicates MFs' growing confidence in better-rated NBFCs. \r

Factors contributing to this surge include RBI's push for banks to limit NBFC funding and the narrowing gap in funding costs between asset management companies and banks. Despite regulatory concerns highlighted by RBI Governor Shaktikanta Das in 2023, NBFCs have diversified funding sources, making MFs more comfortable with exposure. \r

However, bank credit to NBFCs remains significantly higher, reaching Rs 15.54 trillion in April 2024, growing by 14.6% Y-o-Y, compared to MFs' 29.2% in April 2023. MF debt exposure to NBFCs, including commercial papers and corporate debt, surpassed Rs 2 trillion after 55 months, reflecting renewed investor confidence.