'Dene wala jab bhi deta...': CLSA is all praises for RBI's recent liquidity relief for lenders

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26 Aug, 2025 12:21

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Global brokerage CLSA praised the Reserve Bank of India's recent measures to address the liquidity squeeze in the banking sector, underscoring that the relief has come after a couple of years of regulatory tightening. The situation of the Indian banking sector was somewhat reminiscent of the popular phrase, ‘Dene wala jab bhi deta…deta chappar phaadke’, said the note, which loosely translates to ‘…when God gives, he gives in a big way’, it added.

CLSA referred to a number of actions by RBI in recent weeks, including large liquidity infusion in January 2025 to address the banking sector liquidity deficit, which was followed by a  repo rate cut by 25 basis point to 6.25 percent. Additionally, some proposed regulatory tightening around the Liquidity Coverage ratio (LCR) norms and provisions on project financing too also postponed indefinitely, further helping the banking sector.

On February 25, the Reserve Bank of India reduced risk weights on bank loans to non-banking finance companies (NBFCs) and microfinance loans, a move that is expected to significantly improve credit flow to NBFCs.

CLSA said it expects Bandhan Bank to be the biggest beneficiary of the MFI risk-weight reduction, adding that ‘good things are happening for the banking sector’. The brokerage concluded by quoting veteran fund manager Anthony Bolton, "The most money in equity markets is made when things go from bad to less bad."

Shares of Bandhan Bank, AU Small Finance Bank, Fusion Finance and other lenders rose up to 8 percent in February 27, after RBI restored risk weights on exposure of schedule commercial banks (SCBs) to non-banking finance companies (NBFCs), a move that may reduce the cost of funds.

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