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Bajaj Finance Share Faces Setback as RBI Bars NBFC From Lending via 2 Digital Products; Know 5 Important Facts

Bajaj Finance share: RBI Directives Impact Bajaj Finance Shares drop 4% as RBI bars lending under eCOM and Insta EMI

Bajaj Finance share: Operational Breach or Violation?: Analysts expect a short-term impact, classifying it as an operational breach.

Bajaj Finance share : Bajaj Finance Resilience: Facing a potential 6% profit impact, analysts still foresee a swift resolution.

Mumbai,16 November (City Times): Bajaj Finance share: In a recent development, the Reserve Bank of India (RBI) has imposed restrictions on Bajaj Finance, a leading non-banking finance company (NBFC), preventing it from lending under two of its digital products – ‘eCOM’ and ‘Insta EMI Card.’ This move led to a nearly 4% decline in Bajaj Finance share prices. The central bank’s directive was a result of the company’s failure to issue Key Fact Statements (KFS) to borrowers, specifically under these two lending products. The supervisory restrictions will persist until Bajaj Finance rectifies the deficiencies to the satisfaction of the RBI.

Impact on Bajaj Finance Shares

Following the RBI’s directive, Bajaj Finance shares experienced a decline of 3.97%, reaching ₹6,937.15 apiece on the BSE. Analysts anticipate a short-term impact on the company’s shares but believe the issue is more of an operational breach than a major violation. While the Insta EMI Card comprises 5% of Bajaj Finance’s total clients, brokerage firm CLSA estimates a 6% impact on the company’s profits during the ban. Despite this, Bajaj Finance reassures investors that there will be no significant financial repercussions due to the RBI’s action.

5 Important Facts About Bajaj Finance RBI Ban

  1. RBI Restriction: RBI directed Bajaj Finance to halt loans under ‘eCOM’ and ‘Insta EMI Card.’
  2. Deficiencies Identified: The central bank cited non-issuance of Key Fact Statements (KFS) as a major concern.
  3. Immediate Discontinuation: eCOM lending on platforms like Amazon, Flipkart, Yatra will cease immediately.
  4. Review and Corrective Action: Bajaj Finance committed to reviewing and rectifying Key Fact Statements promptly.
  5. Client Base Insight: Insta EMI Card base constitutes only 5% of Bajaj Finance’s total clients.

Operational Changes and Future Prospects

As a consequence of the RBI’s restrictions, Bajaj Finance is compelled to discontinue eCOM lending on e-commerce platforms, affecting partnerships with major players like Amazon, Flipkart, Yatra, and MakeMyTrip. However, the company asserts that it will review and rectify the issues promptly. Motilal Oswal Financial Services suggests that the ban, fortunately, occurred after the festive season, reducing its immediate impact. The brokerage anticipates a potential decline in monthly e-commerce loan volumes, affecting Bajaj Finance’s performance in the next 45-90 days.

Impact on Disbursements and AUM Growth Of Bajaj Finance

Loan Volumes (Monthly Run-Rate)Estimated Impact (Over 45 Days)Estimated Impact (Over 90 Days)Estimated Decline in DisbursementsPercentage of AUM Impact
220,000-230,000345,000690,000₹13.6 billion – ₹45 billion0.5%-1.6%

Analysts’ Perspectives on Bajaj Finance News

As Per Reputed Business Media Institutions, Motilal Oswal Financial Services acknowledges the short-term challenges for Bajaj Finance but maintains a positive long-term outlook for the company. Despite the expected impact on assets under management (AUM) growth and fee income in the second half of the fiscal year 2023-24, the brokerage reaffirms its ‘Buy’ rating on the stock. It views any significant correction in Bajaj Finance’s stock price as an opportunity for investors to accumulate shares. The brokerage emphasizes that Bajaj Finance will take corrective measures and, once compliant with RBI requirements, will regain momentum with its robust digital ecosystem.

In conclusion, while the RBI restrictions on Bajaj Finance have temporarily affected Bajaj Finance, analysts believe the company’s resilience and commitment to compliance will pave the way for sustained growth in the long run. Investors are encouraged to consider the stock as an attractive opportunity amid the current challenges.

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