Bajaj Finance and Bajaj Finserv start session on subdued note after RBI stops Bajaj firm from lending via two schemes
Reserve Bank of India has stopped Bajaj Finance from issuing loans under the ECOM, and Insta EMI card schemes.
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11:16 AM IST
Bajaj Finance Share Price: Shares of Bajaj Finance and Bajaj Finserv started on a lower note on BSE on Thursday (November 16) after the Reserve Bank of India stops Bajaj Finance from issuing loans under two plans. The RBI has banned the company from sanctioning loans under the ECOM, and Insta EMI card schemes.
After the development, shares of Bajaj Finance were down 1.90 per cent, or Rs 137.15, at Rs 7,086.80 each, at 9:33 am, while the shares of Bajaj Finserv were trading down by 1.55 per cent, or Rs 24.70, at Rs 1,569.35 apiece in early morning deals.
What is RBI ban?
Why did RBI do it?
What can be the impact on Bajaj Finance?
These cards play a major role in the company's fee income.
The impact on fee income equal to 2 per cent of AUM.
The impact of ban on Insta EMI Card on income of Rs 65 crore/quarter
There will be a 1.5 per cent impact on PBT due to the ban on Insta EMI Card
If the ban continues, as high as 5-6 per cent impact on the company's profits is possible. Along with that, the company may find it tough to add new customers.
Facts
Out of total 41.9 million EMI cards, 10 per cent cards were issued through digital medium.
Three lakh EMI cards were added in Q2
The company added 3.58 million new customers in Q2
Eight per cent of the total customers of the company were from EMI cards
Only 5 per cent of the company's total client base are EMI card customers.
18 to 19 per cent of the total new customers in 1HFY24 were through digital EMI cards
How long the ban can continue?
It took the RBI more than a year to lift ban from HDFC Bank
while, in case of MMFS, the RBI took a quarter to lift the ban
What brokerage says
The situation may improve in 1 to 2 quarters
This is more of an operational problem than a violation of RBI guidelines
There will be no major impact on digital EMI card payments.
There will be no impact on customer acquisition
The matter may improve with technical upgrade
The company may face problems on cross selling
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