Mutual Fund Exposure In NBFCs Rises 32.5% To Rs 2.77 Lakh Cr In May: CareEdge Report

Mutual fund exposure to non-banking financial companies (NBFCs) rose by 32.5% year-on-year in May 2025, reaching ₹2.77 lakh crore, according to a report by CareEdge Ratings.

The growth was fueled by sustained investments in commercial papers (CPs) and corporate debt, which have remained above ₹2 lakh crore for 14 consecutive months.

This marks a significant rise from the ₹2.69 lakh crore in April 2025 and surpasses the previous high of ₹2.64 lakh crore in July 2018.

NBFC credit share in total bank credit falls

Despite rising mutual fund exposure, the share of NBFC credit in total bank credit declined, dropping from 9.3% in May 2024 to 8.5% in May 2025, as per the report.

India’s mutual fund industry witnessed a substantial increase in assets under management (AUM), climbing from ₹70 lakh crore in April to ₹72.2 lakh crore in May, as per data released by the Association of Mutual Funds in India (AMFI).

The sector recorded net inflows of ₹29,108 crore during the month, with 65% of those inflows coming from equity-oriented schemes.

Equity funds continue to attract investors

Equity fund AUM grew 4.83% month-on-month, reaching ₹32.05 lakh crore, supported by both net inflows and mark-to-market (MTM) gains.

Flexi cap funds led the equity category for the third month in a row, attracting ₹3,841 crore in inflows.

Hybrid and passive funds also gain traction

Hybrid funds reported a 4.43% increase in AUM to ₹9.55 lakh crore, fueled by ₹20,765 crore in net inflows and MTM gains.

Within this category, arbitrage funds received the highest inflows, totalling ₹15,702 crore.

Passive funds continued their strong momentum with ₹5,525 crore in net inflows, marking the 55th consecutive month of positive inflows.

Gold exchange-traded funds (ETFs) returned to positive territory in May after two months of outflows.

Analysts attributed this rebound to geopolitical tensions, market volatility, and expectations of interest rate cuts that made gold a more attractive investment option.

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