India's primary equity market reached unprecedented heights in 2025, with companies raising a record Rs 1.95 trillion through more than 365 initial public offerings, according to Motilal Oswal Financial Services' latest strategy report. This remarkable performance built upon strong momentum from 2024, when Rs 1.90 trillion was mobilised through 336 IPOs. Over the past two years combined, the primary market has facilitated Rs 3.80 trillion in fundraising across 701 IPOs.

NBFC Sector Dominance

Non-Banking Financial Companies emerged as the standout performers in 2025's IPO landscape, demonstrating exceptional investor appetite for credit intermediaries. The sector's fundraising achievements highlight the market's confidence in India's evolving financial services ecosystem.

This performance represents the highest sectoral contribution in the last two years, with NBFC IPOs generating aggregate subscriptions of nearly Rs 14.90 trillion, translating into 23x oversubscription rates that rivalled even capital goods and healthcare sectors.

Major NBFC Listings Performance

Several prominent NBFC names anchored the 2025 IPO wave, reinforcing market confidence in retail lending, housing finance, and diversified credit platforms. Each offering demonstrated distinct market reception and post-listing performance characteristics.

Tata Capital led the charge with India's fourth-largest IPO worth Rs 155.10 billion. Despite moderate 2x subscription levels, the stock has traded essentially flat since listing, indicating efficient price discovery mechanisms.

ICICI Prudential AMC distinguished itself as a high-quality NBFC listing, supported by strong franchise strength and predictable cash flows. The company has delivered consistent gains both on listing and in secondary markets, with shares trading over 20% above the offer price.

Bajaj Housing Finance emerged as one of the most successful NBFC listings, raising Rs 65.60 billion while witnessing robust 50x subscription levels, demonstrating exceptional investor demand for housing finance platforms.

Banking Sector's Measured Approach

While NBFCs dominated IPO activity, banks adopted a more calibrated fundraising strategy. Private banks recorded virtually no IPO fundraising in 2025, while PSU banks emerged as dominant players in the Qualified Institutional Placement market.

State Bank of India alone raised Rs 250 billion through QIP issuance, accounting for approximately 35% of total QIP fundraising in 2025. Other PSU banks including UCO Bank, Central Bank of India, and Indian Overseas Bank also tapped equity markets primarily to strengthen capital ratios and support balance-sheet growth.

Offers for Sale Activity

The Offers for Sale segment witnessed significant participation from financial institutions, with Bank of Maharashtra and Indian Overseas Bank featuring among the largest OFS transactions in 2025. Notably, 60% of OFS proceeds originated from privately owned enterprises, indicating promoter monetisation amid strong market valuations.

The robust performance across NBFCs and the strategic approach adopted by banks underscore the evolving dynamics within India's financial services sector, reflecting both investor confidence and institutional capital optimization strategies.

Credit rating agency Moody's has issued a cautionary forecast for non-banking financial companies (NBFCs) in India, predicting an increase in vehicle loan delinquencies. This projection signals potential challenges ahead for the vehicle financing sector within these financial institutions.

Moody's Forecast

Moody's, a renowned global credit rating agency, has raised concerns about the performance of vehicle loans in the NBFC sector. The agency's analysis suggests that NBFCs are likely to face higher rates of delinquencies in their vehicle loan portfolios in the near future.

Implications for NBFCs

This forecast carries significant implications for NBFCs, which play a crucial role in India's financial ecosystem:

1. Financial Stress: An increase in loan delinquencies could lead to financial stress for NBFCs, potentially impacting their profitability and overall financial health.

2. Risk Management: NBFCs may need to reassess and strengthen their risk management practices, particularly in the vehicle financing segment.

3. Lending Practices: The forecast might prompt NBFCs to tighten their lending criteria for vehicle loans, potentially affecting loan disbursements in this category.

4. Market Perception: Increased delinquencies could affect investor and market perception of NBFCs, possibly influencing their cost of capital and growth prospects.

Factors Contributing to Delinquencies

While Moody's report details are not fully disclosed, several factors could contribute to rising vehicle loan delinquencies:

• Economic uncertainties affecting borrowers' repayment capabilities
• Fluctuations in the automotive market
• Changes in consumer behavior or preferences
• Potential gaps in credit assessment processes

Industry-wide Impact

The forecast by Moody's is likely to resonate across the NBFC sector, prompting industry-wide discussions on:

• Strategies to mitigate rising delinquencies
• Enhancing credit evaluation processes
• Exploring new technologies for better risk assessment
• Potential regulatory implications

As this situation unfolds, it will be crucial for NBFCs to closely monitor their vehicle loan portfolios and adapt their strategies to navigate the challenging landscape predicted by Moody's. Stakeholders, including investors, regulators, and borrowers, will be watching closely to see how NBFCs respond to this forecast and manage the potential rise in vehicle loan delinquencies.