The shares of Bajaj Finance, SBI Cards and others non-banking financial services (NBFC) strongly surged on June 6 after Reserve Bank of India (RBI) Governor Sanjay Malhotra announced the outcome of MPC's meeting, which included a bumper 50 bps key rate cut and 100 bps reduction in Cash Reserve Ratio (CRR).
While announcing the outcome of RBI's Monetary Policy Committee (MPC) meeting, Governor Sanjay Malhotra said that the stress in unsecured loans and credit card portfolios has abated. He however added that stress in MFI still persists.
"The stress witnessed earlier in retail segments like unsecured personal loans and credit card receivables portfolio has abated, while the stress in micro-finance segment is persisting. Banks and NBFCs active in these segments are already recalibrating their business models, strengthening their credit underwriting practices and stepping up their collection efforts to avoid any excessive build-up of risks on this front in future," said Malhotra in his post-monetary policy speech.
SBI Cards and Payment Services soared 4 percent to hit a fresh 52-week high of Rs 982 apiece. Bajaj Finance shares meanwhile gained nearly 4 percent to trade at Rs 9,256.50 apiece.
Shriram Finance shares surged 4 percent to trade at Rs 678 apiece. Mahindra & Mahindra Financial Services also made strong gains, jumping over 3 percent to trade at Rs 271 apiece.
Cholamandalam Investment and Finance Company and Aadhar Housing Finance shares gained over 2 percent, while Poonawalla Fincorp and RBL Bank were up over 1.5 percent each. Aditya Birla Capital shares meanwhile gained around 1.3 percent.
Notably, the sharp rise in the share prices pushed the Nifty Financial Services index higher nearly 1.3 percent to stand at 26,733.
RBI has flagged concerns about unsecured loans multiple times over the years. In February this year, RBI Deputy Governor M. Rajeshwar Rao said, "Of late we have seen some concerns of excessive borrowing in unsecured segment and from derivative euphoria in the capital markets."
While announcing the outcome of MPC's meeting, RBI Governor Sanjay Malhotra announced the central bank’s decision to cut the policy repo rate by 50 basis points to 5.5 percent. Along with that, the central bank changed its stance to ‘Neutral’ from the earlier ‘Accommodative’.
The RBI Governor Sanjay Malhotra also announced a 100 basis points CRR cut to be effective in 4 equal tranches of 25 basis points starting from September 6, October 4, November 1 and November 29.
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