InvestorQ : Is it true that the RBI package announced on 17 April was a boost to NBFCs. How do you see stocks like Indiabulls Finance, Bajaj Finance and HDFC?
Mahima Roy made post

Is it true that the RBI package announced on 17 April was a boost to NBFCs. How do you see stocks like Indiabulls Finance, Bajaj Finance and HDFC?

Answer
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Aditi Sharma answered.
5 months ago


You can certainly say that the RBI package announced was a sure leg up for the NBFC sector. Here is why.

· The package was for markets overall, but primary focus was to help the NBFCs survive challenges posed by COVID-19

· RBI cut reverse repo rate by 25 bps to 3.75%. This reduces what banks earn on the monies parked with RBI. Banks will be incentivized to lend to industry than parking funds

· RBI permitted NBFCs to postpone realty loans up to 1 year where delay in the project completion is due to genuine business distress. This will not attract higher provisioning or reclassification as sub-standard

· Look for TLTRO 2.0 in addition to the regular TLTRO. The special TLTRO for NBFCs of Rs.50,000 crore will have 50% reserved for mid-sized NBFCs

· NBFCs have Rs.250,000 crore of NCDs and CP coming for repayment before May 2020. This offers them a window and will save NBFCs from a large default.

· RBI clarifies on impact of 3-month moratorium. Any NPA classification on loans given by banks and NBFCs will only start after excluding the moratorium period given as part of the COVID-19 rescue package.