Rise in Early-Stage Delinquencies Hits NBFCs' MSME Loan Portfolios Amid Geopolitical Uncertainties

Several non-banking financial companies (NBFCs) are witnessing a rise in early-stage delinquencies in their micro, small and medium enterprises (MSME) loan portfolios, driven by supply chain disruptions and a surge in raw material costs amid the ongoing conflict in West Asia, which has now stretched beyond a month.Industry executives said the trend, while noticeable, does not yet signal a sharp deterioration in asset quality but warrants close monitoring.“At this stage, it is an early warning signal rather than a full-blown asset quality issue. However, if geopolitical uncertainties persist, delinquency risks could rise further,” an NBFC executive said.