SBI will continue to lend to NBFCs, no liquidity concerns: Chairman Rajnish Kumar

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26 Aug, 2025 12:21

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State Bank of India (SBI) will continue to lend to non-banking financial companies (NBFCs) within the regulatory framework and there is no cash crunch situation, Chairman Rajnish Kumar said in a statement.

His statement follows reports that banks are reducing loans to NBFCs, especially home loan providers, and to construction projects part of priority sector lending.

Market players are worried by talk that banks are doing it at RBI’s directions.

"Some comments are being attributed to SBI about the bank being wary of lending to NBFCs. The rumours are baseless. State Bank of India (SBI) will continue to lend to non-banking finance companies (NBFCs) and there is no cash crunch, Chairman Rajnish Kumar said on Saturday.

On September 22, NBFC stocks mainly Dewan Housing Finance (DHFL) and Indiabulls Housing Finance suffered a major crash after liquidity fears gripped the equity market.

"In fact, the recent regulatory guidelines on the company's lending model opens up further opportunities for collaboration between SBI and non-deposit taking NBFCs to increase lending to priority sectors," the SBI statement added.

Analysts feel rising interest rates might have forced many NBFCs to resort to short term borrowings.

The RBI, on September 21, released guidelines on co-origination of loans by banks and non-deposit taking NBFCs in the priority sector, following its announcement in the August credit policy. The move is aimed at leveraging the reach of NBFCs to help banks meet their priority sector lending targets.

Priority sector lending includes loans to sectors such as agriculture, micro enterprises, social infrastructure, education and renewable energy.

The co-origination arrangement should entail “joint contribution of credit by both lenders,” RBI said, adding that it should also involve “sharing of risks and rewards between banks and NBFCs.”

Under the new guidelines, NBFCs will take a minimum 20 percent credit risk by way of direct exposure, with the balance being availed by banks.