Bajaj Finance Shares Slide Over 5% As RBI Draft Proposal Puts Focus On NBFC Lending Model

Bajaj Finance was among the biggest losers on Friday after investors reacted to a draft proposal released by the Reserve Bank of India (RBI).

The proposal has raised fresh questions over the future of certain lending products offered by non-banking financial companies (NBFCs), prompting traders to trim their positions in the stock.

The selling pushed Bajaj Finance shares down by as much as 5.55% during intraday trade, with the stock touching ₹1,086 before recovering some of the losses.

At 11:06 AM, the stock was trading at ₹1,096.50, down 4.22%.

RBI Proposal Triggers Fresh Concerns

The latest draft framework proposes changes to how revolving credit facilities are offered by NBFCs.

According to a note from Morgan Stanley, the RBI wants such facilities to remain available only to entities that are specifically authorised to issue credit cards. If the proposal is implemented in its present form, several lending products currently offered by NBFCs could come under pressure.

The draft also separates revolving credit from conventional term loans. Once a borrower repays the outstanding amount under a term loan, the sanctioned limit would not automatically become available again, unlike products that currently operate on a flexible credit structure.

Bajaj Finance’s Credit Products In Focus

The proposal has drawn attention because flexible lending products form an important part of Bajaj Finance's portfolio.

Its MSME business includes working capital products that make use of flexi-credit limits. The company's MSME loan book currently stands at around $5.4 billion, making it one of the areas investors are watching closely.

Another business that could remain under focus is the company's EMI Card platform. Bajaj Finance has 97.71 million EMI cards in circulation, allowing customers to access revolving credit limits of up to ₹3 lakh with repayment periods extending up to 60 months.

Profit Booking Also Added To The Decline

Market experts said the RBI proposal was not the only factor behind Friday's fall.

They noted that the stock had rallied sharply ahead of the quarterly results. This led some investors to book profits after the recent rise.

Investors Await The Final Framework

The RBI has only released a draft proposal and is expected to seek feedback before issuing the final framework.

Until there is more clarity, investors may continue to watch lenders that have significant exposure to revolving credit products. Bajaj Finance is likely to remain one of the stocks in focus.

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