Manappuram Finance shares tumbled 18% to an intra-day low of Rs 145.42 after the Reserve Bank of India cracked the whip on the subsidiary, Asirvad Microfinance.
The lender of last resort took stringent action against four Non-Banking Financial Companies (NBFCs). The RBI has issued directions to Asirvad Micro Finance Limited, Arohan Financial Services Limited, DMI Finance Private Limited and Navi Finserv Limited, to cease and desist from sanction and disbursal of loans, effective from the close of business of October 21, 2024.
Also, these entities were found to charge excessive pricing and were not in compliance with the regulatory guidelines.
“This action is based on material supervisory concerns observed in the Pricing Policy of these companies in terms of their Weighted Average Lending Rate (WALR) and the Interest Spread charged over their cost of funds, which are found to be excessive and not in adherence with the regulations as laid down in the Master Direction. These are also found to be not in conformity with the provisions laid down under the Fair Practices Code issued by the Reserve Bank,” read a press release.
Industry under scrutiny
The NBFC industry is under constant RBI scrutiny, earlier, IIFL Finance was prohibited from sanctioning, disbursing, or selling any of its gold loans in March this year citing certain supervisory concerns. However, the banker to the government lifted the restriction.
Manappuram Finance Vs Nifty 50
Shares of Manappuram Finance have fallen over 16% in the past five trading sessions. It has erased 26% of investors’ wealth in the past one month and 18% in the last six months. The stock has fallen almost 10% from year to date. However, it has given a return of around 9% in the last one year.