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Business News/ Market / Stock-market-news/  Shares of Muthoot Finance, Manappuram Finance fall on RBI guidelines
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Shares of Muthoot Finance, Manappuram Finance fall on RBI guidelines

RBI said that with immediate effect the loans amounting to Rs20,000 and above can be disbursed only by cheque as opposed to earlier threshold limit of at ₹1 lakh and above

Muthoot Finance closed at Rs 337.95 on BSE, down 3.9% from its previous close while Manappuram Finance fell 4.5% to close at Rs 90.50. Photo: Ramesh Pathania/ MintPremium
Muthoot Finance closed at Rs 337.95 on BSE, down 3.9% from its previous close while Manappuram Finance fell 4.5% to close at Rs 90.50. Photo: Ramesh Pathania/ Mint

Mumbai: Shares of gold loan provider Muthoot Finance Ltd and Manappuram Finance Ltd fell sharply on Friday after the Reserve Bank of India (RBI) prescribed a limit of Rs20,000 for loan disbursements or repayments in cash.

RBI said that with immediate effect the loans amounting to 0,000 and above can be disbursed only by cheque. Earlier, the threshold limit was at 1 lakh and above.

In intraday, Muthoot Finance Ltd shares fell 7.07% to touch a low of 326.65, while Manappuram Finance Ltd declined 5.7% to 89.40. Muthoot Finance closed at 337.95 on BSE, down 3.9% from its previous close while Manappuram Finance fell 4.5% to close at 90.50. India’s benchmark Sensex Index rose 0.06% to 28,946.23 points.

“We believe that this revision will disrupt non banking finance companies operating in the cash ecosystem even as the experience during demonetisation of managing such transitions was impressive," said Kotak Insitutional equities in a note to its investors.

“This will reduce the ability of NBFCs to accept partial or full loan repayment in cash thus reducing their leeway on the collections front. We await further clarity before revising our forecasts and price targets," it added.

Analyst says that the move aimed to discouraging cash transactions and furthering the digital payment drive.

From 1 March onwards, HDFC Bank, ICICI Bank and Axis Bank started charging a minimum amount of Rs150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.

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Published: 10 Mar 2017, 10:29 AM IST
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