Shares of non-banking financial companies (NBFCs) rallied in early trade on Thursday after the Reserve Bank of India (RBI) announced a relaxation in risk weights on bank lending to the sector.
Bajaj Finance, Cholamandalam Investment & Finance, and L&T Finance were among the key gainers as investor sentiment turned positive following the central bank’s move to lower the risk weight on bank loans to NBFCs from 125 percent to 100 percent. The decision, which takes effect from April 1, reverses a tightening measure imposed in November 2023 that had increased capital requirements for banks lending to NBFCs.
The stock markets remained closed on February 26 due to Mahashivaratri, and as trading resumed on Thursday, NBFC stocks saw a sharp uptick.
Bajaj Finance shares rose nearly 3 percent in early trade, hitting Rs 8,739 on the NSE before paring some gains. At around 11 AM, the stock was trading at Rs 8,689.35, up 2.36 percent.
Shriram Finance gained about 4.50 percent, touching Rs 600.15 at trading as of 12:15 pm.
Cholamandalam Investment & Finance Company saw an intraday high of Rs 1,439.95, marking a 5.27 percent rise. The stock had opened with a gain of 2.8 percent, reflecting strong buying interest.
Mahindra and Mahindra Financial Services shares are trading at Rs 280.70 reflecting a gain of 3.58 percent, as of 1:50 pm.
L&T Finance also surged, reaching an intraday high of Rs 142.18 on the NSE, up 6.51 percent. The stock rebounded after three consecutive sessions of losses. Shares of Aditya Birla Capital rose over 3 percent, while Poonawalla Fincorp stock jumped over 4 percent in trade today.
SS Mundra, Former RBI Deputy told CNBC-TV18, "RBI is surely looking to boost growth , around Rs 40,000 crore of capital would be released after RBI circular which can translate to Rs 4 lakh crore of lending."
The reduction in risk weights will ease funding costs for NBFCs as banks can now allocate capital more efficiently. This move is expected to support credit flow to the sector, providing a boost to business expansion and growth.
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