NBFC stocks on a roll: Will the party last long?

Saikat Das
moneycontrol.com

Shares of non-banking finance companies are back in the limelight after the Reserve Bank of India (RBI) gave clarification on securitized loans to priority sector. The circular, issued by RBI, has allayed investor apprehensive to some extent on possible regulatory challenges for the sector.

While NBFC bosses looked excited about the spike in stock prices, analysts preferred to play the waiting game awaiting a clearer picture on regulatory challenges.

"We have been always of the view that securitized loans come under priority sector tag," V Ravi, CFO, Mahindra Finance told moneycontrol.com.

"The RBI classification has helped waning investors fear. We have 12% exposure through securitized loans. We always believe in diversified approach in raising money. We may increase our securitized portfolio exposure to 20%," he said

The notification issued by the RBI, last Friday, mentioned that investments made by banks in securitized assets, representing loans to various categories of priority sector, shall be eligible for classification under priority sector, provided the securitized assets are originated by banks and eligible financial institutions and fulfill the Reserve Bank of India guidelines on securitization.