PremiumMUMBAI: Shares of non-banking finance companies fell on Friday after banks bid only half of the offer from the Reserve Bank of India's (RBI) second edition of targeted long-term repo operation.
Bajaj Finance fell 4%, HDFC Ltd 2%, Manappuram Finance Ltd 4%, LIC Housing Finance Ltd 5%, Repco Home Finance 4%, Can Fin Homes Ltd 4%, Shriram Transport Finance 6%, Cholamandalam Finance Holding 6%, Edelweiss Financial Service 6%, and L&T Finance Holdings 5%.
Analysts believe the tepid response to TLTRO 2.0 shows how hesitant banks are to invest in non-bank financiers and microfinance institutions.
“Banks bid only for 50% of RBI’s line today to NBFCs & MFIs. Complete risk aversion. RBI must give a direct line & Finmin must offer to bear first loss for some time. Let’s get our smaller but important lenders ready for the restart of our economy," Sanjiv Bajaj MD - Bajaj Finserv said in a tweet.
“Most countries are providing regular fiscal stimulus to provide confidence to an economy that’s preparing to restart. When will we?" he added.
To ease the flow of credit into NBFC sector, who had been refused a three-month moratorium by most banks, RBI had announced ₹50,000 crore of TLTRO 2.0 in tranches “to begin with".
On 17 April, RBI governor Shaktikanta Das said funds availed by banks under TLTRO 2.0 should be invested in investment grade bonds, commercial paper, and non-convertible debentures of NBFCs, with at least 50% of the total amount availed going to small- and mid-sized NBFCs and microfinance institutions.
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