Shares of Bandhan Bank Ltd jumped nearly 7% to ₹144.70 on February 27 after Nomura and other brokerages highlighted the positive impact of RBI’s decision to lower risk weights for bank loans to NBFCs and microfinance institutions (MFIs). The move is expected to increase credit availability, benefiting banks with higher exposure to the microfinance segment.
On Tuesday, the Reserve Bank of India (RBI) reversed its November 2023 decision, which had increased risk weights on bank finance to NBFCs and MFIs by 25 percentage points. With this rollback, banks will now have to set aside fewer funds as a safety net, effectively freeing up capital for lending. This is expected to boost liquidity in the sector and support loan growth, particularly for banks with a strong presence in microfinance lending.
Nomura’s Take on RBI’s Risk Weight Reduction
Nomura views this regulatory change as a positive development, especially for banks and NBFCs with significant MFI exposure, such as Bandhan Bank, AU Small Finance Bank, and IndusInd Bank. The brokerage stated that the rollback, effective from April 1, 2025, will improve capital adequacy ratios and enhance credit flow to the MFI sector.
However, Nomura also noted that RBI has not reversed its increase in risk weights on personal loans and credit cards, signaling a continued cautious approach toward unsecured lending.
Stock Performance & Key Market Data
- Current Price: ₹144.70
- Day’s Gain: +6.92% (+₹9.36)
- Previous Close: ₹135.34
- Market Cap: ₹234.56 billion
- Day Range: ₹140.02 – ₹146.38
- 52-Week Range: ₹128.16 – ₹222.31
- P/E Ratio: 9.45
- Dividend Yield: 1.03%
With RBI’s policy shift boosting investor confidence in the microfinance sector, analysts expect improved liquidity and credit growth to drive further upside in stocks like Bandhan Bank and AU Small Finance Bank in the coming months.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions.
