Bajaj Finance trades down on halting EMI cards to comply with RBI order

The company added that they will continue to offer financing to new and existing customers at dealer stores in the normal course of business.

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Shares of Bajaj Finance, skidded 0.7 percent in morning trade on November 20, after the lender temporary suspended issuing member ID cards to customers following a November 15 RBI order. At 10:30 am, the stock was trading at Rs 7,171.30.

In a regulatory filing on November 17, Bajaj Finance said that the company had temporarily suspended issuance of the Existing Member Identification (EMI) cards to new customers till “the deficiencies observed by the RBI are rectified to their satisfaction” and added that it will continue to offer financing to new and existing customers at dealer stores in the normal course of business. The decision, it mentioned, will not have a material financial impact.

Analysts at Morgan Stanley have given the stock an ‘overweight’ call with a target price of Rs 10,300 per share.

Bank of America analysts have given the stock a ‘buy’ call with a target price of Rs 8,845 per share. According to the report, the company can expect to see fee income impacted in the near term.

Also read: Bajaj Finance in double trouble from RBI’s risk-weight norms, product ban

On November 15, the RBI had asked Bajaj Finance to stop sanction and disbursal of loans under eCOM and Insta EMI Card. According to the a release, the  action was taken “on account of non-adherence to the extant provisions of digital lending guidelines of the Reserve Bank of India, particularly non-issuance of key fact statements to the borrowers under these two lending products and the deficiencies in the key fact statements issued in respect of other digital loans sanctioned by the company”.

Also read: Decoding RBI credit risk weight impact across banks, NBFCs; how each lender will lose, gain

Additionally, on November 17, the RBI announced  an increase in risk weight on consumer credit exposure of non-banking financial corporations (NBFCs) to 125 percent from 100 percent earlier.

Since November 13, the Bajaj Finance stock has shed over 3 percent.

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