Stocks of non-banking finance companies (NBFC) were battered after RBI said it would strengthen norms for NBFCs to avoid risks in asset-liability management in future in the light of IL & FS crisis. Asset-liability management is in the process of managing the use of assets and cash flows to meet a company’s obligations in order to reduce the firm’s risk of loss from not paying a liability on time.
NBFC stocks suffered huge losses after RBI deputy governor NS Vishwanathan said, “We are looking at further strengthening NBFCs’ asset-liability management guidelines to avoid risk of asset liability management.”
Stocks that fell the most included Dewan Housing Finance (-7.80 per cent), Mahindra & Mahindra Financial Services (-6.85 per cent), Bajaj Finance (-6.30 per cent), Edelweiss Financial (-6.83 per cent), HDFC (-3.24 per cent), Shriram Transport Finance (-4.59 per cent), Sundaram Finance (5.87 per cent).
Only NBFC stock that didn’t fall and gained in such a trying market condition was Shriram City Union Finance as it was up 1.48 per cent.
As NBFC stocks have already fallen between 20-60 per cent since the IL&FS crisis surfaced last month, some of the NBFC stocks already down more than 50-60 per cent didn’t face wrath of investors on Friday like Motilal Oswal Financial Services (-1.24 per cent), Reliance Home Finance (-4.75 per cent).
Ajay Kejriwal, president, Choice Broking said, “RBI’s stricter norms for NBFCs is good for economy and from market point of view though there will be short term pain but in the long term it will benefit market.” “ Market fell on Friday not due to selling in NBFC stocks but because of the selling by the foreign institutional investors,” Kejriwal added.
Foreign portfolio investors sold stocks worth Rs 3370.14 crore on Friday as per the provisional stock exchange data, on Thursday too they were net sellers by Rs 2665.02 crore as per NSDL data.