Now Reading: RBI revolving credit ban hits Bajaj Finance, Tata Capital
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RBI revolving credit ban hits Bajaj Finance, Tata Capital
Shares of Bajaj Finance and Bajaj Finserv lost nearly Rs 55,000 crore in market cap after the Reserve Bank of India proposed to bar non-banking finance companies (NBFCs) from offering revolving credit…
The Story in Brief
Shares of Bajaj Finance and Bajaj Finserv lost nearly Rs 55,000 crore in market cap after the Reserve Bank of India proposed to bar non-banking finance companies (NBFCs) from offering revolving credit facilities. According to brokerage IIFL, Bajaj Finance has the highest exposure, with revolving credit products making up 15% of its consolidated AUM and 20% of standalone AUM. Tata Capital's exposure is in the high single digits to low double digits. The move could hit customer acquisition, growth, and profitability for lenders with significant exposure. However, credit card issuers like SBI Cards may benefit as some demand shifts to credit cards. Morgan Stanley said NBFCs could redesign products and that grandfathering existing facilities could substantially mitigate the impact.
The Indian Opinion
The immediate alarm over the RBI's proposal is understandable, but the narrative that this will cripple NBFCs is one-sided. Lenders like Bajaj Finance have time to redesign products, and Morgan Stanley notes that grandfathering existing loans could substantially soften the blow. The real test is not the stock reaction but whether the final rules allow a level playing field and what compliant alternatives emerge. Will the regulator grandfather existing facilities, or will NBFCs innovate fast enough to retain customers without the revolving feature?
Sources (2): bfsi.economictimes.indiatimes.com, timesofindia.indiatimes.com
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
