Non-Banking Financial Companies (NBFCs) came into focus after RBI Governor Shaktikanta Das, in his monetary policy address, raised concerns about high costs and indebtedness posing financial stability risks for non-banks. Governor Das specifically flagged concerns over some NBFCs charging usurious interest rates and pursuing excessive returns on equity, warning that the RBI will not hesitate to take necessary actions to regulate the sector.
The Governor also mentioned upcoming measures aimed at responsible lending conduct, including the regulation of foreclosure charges and prepayment penalties on loans, which could have an impact on the operational policies of NBFCs.
Stocks to Watch:
1. Poonawalla Fincorp
As an NBFC operating in various lending segments, Poonawalla Fincorp could be influenced by regulatory actions targeting lending practices and loan charges.
2. Bajaj Finance
Bajaj Finance, a prominent NBFC, might be impacted by the regulatory scrutiny, particularly with regard to prepayment penalties and interest rate regulations.
3. Five Star Business Finance (MFI, Unsecured Lending)
With its focus on microfinance and unsecured lending, Five Star Business Finance could face challenges related to the RBI’s measures on responsible lending and foreclosure charges.
4. Fusion Microfinance (MFI)
Fusion Microfinance, another major microfinance player, is expected to be affected by the regulatory focus on unsecured lending practices and interest rate management.
5. Capri Global (MFI, Unsecured Lending)
Capri Global, with its involvement in unsecured lending, could also be affected by the RBI’s tighter regulatory measures on NBFCs, particularly around interest rate practices and growth strategies.
