Higher Credit Risk For NBFCs In MSME & Vehicle Loan Segments: Nomura

Pressure on MSME and Business Loans Nomura noted that NBFCs are likely to adopt a cautious stance towards lending in business and MSME segments, where the impact of rising fuel costs is expected to be immediate. These segments, including secured and unsecured loans such as loans against property, account for nearly 24 per cent of NBFC credit. Early signs of stress are already emerging, with small businesses facing fuel shortages and rising input costs. According to the report, Some of them are trying to use alternate sources to keep their shops running while others have written to the government urging for support. The report warned that credit costs in these segments could rise fr0m the first quarter of FY2026–27, potentially prompting lenders to slow disbursals. MSME Industry Response The Federation of Indian Micro and Small Medium Enterprises (FISME), the national body of MSMEs, has expressed concerns about these emerging challenges. “MSMEs are facing a double whammy. On the one hand, they are facing tough challenges related to rise in logistics cost, access to PNG and shortages of raw material, on the other hand, the financial institutions are tightening lending at a time when MSMEs need support to tide the liquidly crunch,” says Anil Bhardwaj, Secretary General, FISME. Fuel Price Hike to Add to Cost Burden Industrial diesel prices have already increased, and retail fuel prices are expected to be raised gradually after state elections scheduled at the end of April 2026. This is likely to further strain operating margins, particularly for small and medium enterprises with limited pricing power. Vehicle Loans Also at Risk The vehicle loan segment is also expected to come under pressure due to higher fuel prices and a possible slowdown in economic activity. Fleet operators may face increased diesel and petrol costs along with reduced vehicle utilisation. While larger operators may be able to pass on higher costs, individual vehicle owners could struggle with loan repayments, increasing the risk of delinquencies. (KNN Bureau)