Shares of Banks and non-banking finance company (NBFCs) surged from 1% to 13% after the Reserve Bank of India (RB)'s announcement to ease risk weights on Bank lending to the sector.
Creditaccess Grameen (up 13.10%), Bajaj Finance (up 2.6%), Cholamandalam Investment & Finance (up 4.60%), and L&T Finance(up 5.25%), Bandhan Bank (up 1.44%) advanced.The RBI has reduced risk weights on bank loans to NBFCs from 125% to 100%, effective April 1. This decision reverses a tightening measure introduced in November 2023, which had increased capital requirements for banks lending to NBFCs.
The reduction in risk weights will ease funding costs for NBFCs as banks can now allocate capital more efficiently.
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