NBFCs Rise After RBI Nod For Banking Correspondent

Shares in non-banking finance companies such as SKS Microfinance, Magma Fincorp jumped as high as 8 per cent on Wednesday after the RBI allowed banks to appoint non-banking finance companies (NBFCs) which do not accept deposits as their business correspondents.

Working as banking correspondents provides a strong fee income opportunity for these non-deposit-taking lenders.

Speaking to NDTV, I Unnikrishnan, managing director at Manappuram Finance said "This is really a positive development for all non-deposit taking NBFCs.... This will increase customer portfolio in to our branches, there will be more cross selling opportunities for us."

This move will also help banks to increase their reach in remote areas where it is not cost effective to set up a branch.

Shares in other NBFCs like Muthoot Finance and Manappuram Finance rose nearly 4 per cent.

As of 9.40 a.m., shares in SKS Microfinance traded 5 per cent higher at Rs 284.35, while Manappuram Finance rose 3 per cent to Rs 24. Other gainers included Magma Fincorp, which advanced 4.32 per cent at Rs 96.20, and Muthoot Finance, up 2 per cent to Rs 192.35.

(With inputs from Reuters)