NBFCs cheer State Bank of India’s move to triple assets purchase target; stocks surge up to 11%

By: | Published: October 10, 2018 12:26 PM

Following SBI's decision, shares of NBFCs like Shriram Transport Finance, Edelweiss Financial Services and DHFL soared up to 11% on the National Stock Exchange.

NBFC stocksShares of Shriram Transport Finance Company, Edelweiss Financial Services and DHFL gained up to 11%.

NBFCs share price: Shares of Indian non-banking financial companies (NBFC) surged on Wednesday after India’s largest bank State Bank of India (SBI) almost tripled its target of buying loan portfolio from such institutions. NBFCs shares were under pressure for over a month now over liquidity concerns. However, the development lifted the sentiments as the move is expected to give additional liquidity cushion to NBFCs.

Shares of Shriram Transport Finance Company soared by 11.67% to an intra-day high of 1,067.40 per share on the NSE. The stock witnessed the biggest percentage gain since July this year. Edelweiss Financial Services shares gained 9.97% and rose to an intra-day high of Rs 163.80. Bajaj Finance Limited shares rose 9.42% to Rs 2,255, while DHFL shares gained 14.58% to hit an intra-day high of Rs 280.80 per share.

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Among other NBFC stocks, JM Financial shares were up 7.94% to hit an intra-day high of Rs 84.95 per share and IIFL Holdings Limited shares were up 5.97% to scale a high of Rs 479.45 intra-day on the NSE. Check other NBFC shares which posted gains on Wednesday:

Source: National Stock Exchange

The State Bank of India (SBI) on Tuesday said it will buy the assets of NBFCs to the tune of Rs 45,000 crore, extending from its earlier planned target of Rs 15,000 crore. SBI’s move is likely to provide liquidity support to the non-banking financing companies, which were facing headwinds after a series of loan defaults by IL&FS group firms. Following the announcement, Economic Affairs Secretary Subhash Chandra Garg said in a tweet that this step should alleviate liquidity concerns of non-banking financing companies (NBFCs) to a great extent.

Also read: SBI to bailout NBFCs? India’s largest bank triples asset purchase target from NBFCs – what Rajnish Kumar says

“Bank had initially planned for a growth of Rs 15,000 crore through portfolio purchase during the current year which is now being enhanced. As per the bank’s internal assessment, there may be an opportunity to buy additional portfolio in the range of Rs 20,000 (crore) to Rs 30,000 crore,” SBI said in a statement. Since late September, NBFCs had been facing a liquidity crunch following a series of loan repayment default by IL&FS and its group companies.

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