NBFCs rally on ‘guidelines’ for new licences

NBFC are financial institutions that provide banking services without meeting the legal definition of a bank.

Shares of non-banking financial companies on Monday surged by up to 14.42 per cent on BSE after the Reserve Bank unveiled draft guidelines on new banking licences.

Bajaj Finserv settled 14.42 per cent higher at Rs 571.85 on the Bombay Stock Exchange (BSE). LIC Housing Finance gained 3 per cent to end at Rs 205.80 apiece. Brokers attributed the rise in these stocks to release of draft guidelines for new licences by the RBI. Companies like IFCI zoomed by 11.25 per cent,while IDFC and Indiabulls Financial Services witnessed an upsurge of 5.72 per cent and 7.78 per cent,respectively,on BSE. Non-banking Finance Companies (NBFCs) are financial institutions that provide banking services without meeting the legal definition of a bank.

The Reserve Bank on Monday unveiled the draft guidelines on new banking licences,pegging the minimum required capital from a corporate to set up a bank at Rs 500 crore while limiting foreign shareholding at 49 per cent. Meanwhile,the BSE benchmark Sensex ended 3.58 per cent higher at 16,416.33.