Bajaj Finance Shares Dip Following RBI’s Lending Restrictions

Bajaj Finance Shares Dip Following RBI's Lending Restrictions

VoM News Desk | November 16, 2023 | 10:15 AM IST | Breaking News | Follow on Google News

Bajaj Finance Shares Dip Following RBI’s Lending Restrictions

Bajaj Finance Shares Dip Following RBI’s Lending Restrictions

The stock of Bajaj Finance experienced a nearly 4% decline on Thursday following a directive from the Reserve Bank of India (RBI) that barred the non-banking finance company (NBFC) from issuing loans under two of its products. The shares dropped as much as 3.97% to ₹6,937.15 each on the Bombay Stock Exchange (BSE). The RBI’s order specifically targeted Bajaj Finance’s ‘eCOM’ and ‘Insta EMI Card’ lending products, citing issues with the non-issuance and deficiencies in Key Fact Statements (KFS) provided to borrowers.

Bajaj Finance’s Compliance Measures

In response to the RBI’s concerns, Bajaj Finance has committed to a thorough review of the KFS for the two mentioned products and to implement necessary corrective actions. The company assured that this development will not have a significant financial impact on its operations. However, analysts have noted that while the Insta EMI Card base represents only 5% of Bajaj Finance’s total client base, the company’s shares may still face short-term pressure.

Market Reaction and Analyst Perspectives

Despite Bajaj Finance’s assurance of minimal financial impact, analysts predict some immediate challenges for the company’s stock. The restrictions are seen as more of an operational breach than a major violation, with expectations that the issues can be resolved swiftly. Brokerage firm CLSA has projected a potential 6% impact on Bajaj Finance’s profits while the ban remains in effect. At 9:30 am on the same day, the company’s share price had already seen a 2.00% reduction, trading at ₹7,079.45 on the BSE.

Looking Ahead for Bajaj Finance

The situation places Bajaj Finance in a critical phase of ensuring compliance and regaining the RBI’s approval for its lending operations. The company’s immediate focus will be on rectifying the identified deficiencies and reinstating its full range of lending services, keeping in mind the regulatory standards set by the RBI.

VoM News Desk

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