India’s banking sector has shown resilience, with gross NPAs at a 12-year low of 2.6% as of September 2024. Scheduled Commercial Banks’ profit after tax grew 22.2% year-on-year in H1 FY25, while deposits saw an 11.1% year-on-year increase by November 2024.
The RBI has reversed its earlier decision to increase risk weights on bank loans to NBFCs, restoring them to 100% from April 1, 2025, from an earlier weight of 125%. This move will free up capital for banks, boosting lending capacity. Small finance banks also gained as lower risk weights reduced capital requirements for such loans.
On November 16, 2023, the RBI increased risk weights on bank loans to NBFCs by 25 percentage points if the original risk weight was below 100%. This raised capital requirements for lending to AAA-, AA-, and A-rated NBFCs, making such loans more capital-intensive for banks.
After the RBI’s change, bank lending to NBFCs slowed significantly, with year-on-year loan growth dropping to 6.7% by December 2024 from 15% a year earlier. Overall bank credit growth also declined, falling to 11.2% from 20% during the same period, according to RBI data.
Here are some of the stocks that jumped up to 7% after RBI restored NBFC lending norms;
1. Suryoday Small Finance Bank Ltd
With a market capitalization of Rs 1,238.22 crore, the shares were trading at Rs 116.50 per share, increased by 6 percent as compared to the previous closing price.
2. Ujjivan Small Finance Bank Ltd
With a market capitalization of Rs 6,313.20 crore, the shares were trading at Rs 32.63 per share, increased by 3.42 percent as compared to the previous closing price.
3. AU Small Finance Bank Ltd
With a market capitalization of Rs 41,239.21 crore, the shares were trading at Rs 554.00 per share, increased by 7 percent as compared to the previous closing price.
4. Utkarsh Small Finance Bank Ltd
With a market capitalization of Rs 2,812.41 crore, the shares were trading at Rs 25.53 per share, increased by 7 percent as compared to the previous closing price.
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5. Jana Small Finance Bank Ltd
With a market capitalization of Rs 4,396.75 crore, the shares were trading at Rs 416 per share, increased by 3 percent as compared to the previous closing price.
6. Equitas Small Finance Bank Ltd
With a market capitalization of Rs 6,717.63 crore, the shares were trading at Rs 58.94 per share, increased by 5 percent as compared to the previous closing price.
7. RBL Bank Ltd
With a market capitalization of Rs 9,892.89 crore, the shares were trading at Rs 162.75 per share, increased by 7 percent as compared to the previous closing price.
8. Cholamandalam Investment & Finance Company Ltd
With a market capitalization of Rs 30,603.03 crore, the shares were trading at Rs 1,629.75 per share, increased by 6 percent as compared to the previous closing price.
9. Bajaj Finance Limited
With a market capitalization of Rs 5.39 lakh crore, the shares were trading at Rs 8,695.50 per share, increased by 3 percent as compared to the previous closing price.
10. Muthoot Finance
With a market capitalization of Rs 88,442.50 crore, the shares were trading at Rs 2,203.00 per share, increased by 0.87 percent as compared to the previous closing price.
Written by Abhishek Singh
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