RBI Restrictions Cause a 3% Drop in the Price of Bajaj Finance Shares

Mumbai – Following the Reserve Bank of India’s (RBI) prohibition against the non-banking finance company (NBFC) from making loans through its ‘eCOM’ and ‘Insta EMI Card’ products, Bajaj Finance’s share price fell by 4%. The central bank issued an order to immediately stop loan sanction and disbursement, citing incomplete Key Fact Statements (KFS) for other digital loans and non-issuance of KFS altogether. Analysts emphasize that this is an operational breach, not a significant infraction, and anticipate a short-term consequence.

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Operational Vulnerability, Limited Effect

Analysts minimize the effect, pointing out that just 5% of Bajaj Finance’s customers use the Insta EMI Card. CLSA expects a 6% decline in profits while the ban is in effect. Although Bajaj Finance guarantees there won’t be any major financial effects, eCOM financing on websites like Amazon and Flipkart will terminate. Following the holiday season, there will likely be a dip in the new loans being made.

Possible Effect on Loan Amounts

For the next 45 to 90 days, Motilal Oswal Financial Services projects possible losses in e-commerce loan volumes ranging from 345,000 to 690,000. The brokerage anticipates a slowdown in purchases and issuances even if there isn’t a statutory limit on issuing Insta EMI Cards. A 45–to 90-day embargo period might see a drop in disbursements between ₹13.6 billion to ₹45 billion if Bajaj Finance compromises on loan volumes.

The Long-Term Thesis Is Still Valid

Motilal Oswal keeps its ‘Buy’ recommendation while noting the short-term effect on AUM growth and fee income in H2FY24. The firm thinks Bajaj Finance will make amends, and with its digital ecosystem in place, the company’s momentum will pick up once the RBI is happy.

Update on Share Price

The share price of Bajaj Finance was 2.00% down at ₹7,079.45 per share on the BSE at 9:30 am.

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