Bandhan Bank Share: The stock of Bandhan Bank saw a strength of more than 7 percent during early trading on BSE and the stock reached Rs 283. In fact, Bandhan Bank has benefited from the relaxation of the rules of microfinance lending by the Reserve Bank of India (RBI). Jeffries has considered this news positive for NBFC-MFIs as well as banks like Bandhan Bank. These norms will be applicable from 1st April, 2022.
RBI removes micro lending limit
The global brokerage said in a note, “RBI has removed the 10 per cent limit for NBFC-MFIs in the rules for micro lending. Thus the limit for MFI loan against household income has increased from Rs.1.25-2 lakh to Rs.3 lakh per annum. Also the loan mix for NBFCs has been relaxed.
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Jeffreys buy advice with a target of Rs 380
Jeffries has a buy call on Bandhan Bank shares with a target of Rs 380. However, the brokerage has also cited risks such as shortfall in collections due to Omicron wave, rules related to new microloan framework to be released soon by RBI and weak economic recovery.
RBI’s revised rules for microfinance loans emphasize on making the norms lender friendly and deregulation of NBFC-MFIs. The brokerage said that these changes are easier than the draft released in June 2021.
New Framework Positive for NBFC-MFIs
Jeffries said, “The revised framework is the most positive for NBFC-MFIs, as it calls for uniform norms for all entities. Some of the prominent listed NBFC-MFIs include CreditAccess Grameen, Spandana Spoorti and Satin Credit Care Network. These rules have some positives for banks like Bandhan and even small finance banks.
Further, lenders will have to take board approval on the pricing policy for MFI loans and the 10 per cent cap on spreads for MFIs will be done away with.
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