NBFC stocks drag up to 35% in 2-days on the RBI action

NBFC stocks come under pressure in Wednesday's trade (March 6, 2024) due to RBI's back-to-back action on NBFCs. After IIFL Finance, the apex banking body has restricted JM Financial to disburse loan against shares and debentures.

JM Financial today closed over 10 per cent lower or Rs 10.25 at Rs 85.28, while in early trade the stock hit a 20 per cent lower circuit at Rs 76.43 per share.

Furthermore, similar selling pressure is also witnessed in the stock of IIFL Finance, which is down for the second straight day, after RBI banned the NBFC company from extending fresh gold loans amid supervisory concerns at the concern.

"Currently NBFCs are facing regulatory actions looking at the instances at Bajaj Finance followed by Paytm and recently on IIFL Finance and JM Financials.   More such instances are expected to create overhang on the NBFC sector," said Rahul Malani, Research Analyst, Sharekhan by BNP Paribas.  

“Sentiments are a bit weak in the NBFC space due to RBI’s restrictive actions against some NBFCs,”  Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services noted.

Other NBFC stocks that saw similar sell-off in the session include stocks like Aditya Birla Capital, Manappuram Finance and L&T Finance among others.

Meanwhile, on the sideline, the RBI today asked banks and NBFCs to follow new norms for credit card issuance as per card issuers are advised to give options to customers when it comes to choosing the card network. The step has been taken as banks and NBFCs without the consent of customers issue them the card network of their choice considering the association they have with the card network entities.