Non-bank lender stocks surge after RBI policy announcement and relaxed norms boost sector outlook
MUMBAI: Shares of non-bank lenders surged on Monday following the
RBI
's policy announcement on June 6, with many NBFC and small finance bank stocks posting sharp gains. The central bank's decision to reduce risk weights on retail loans for well-capitalised NBFCs and its dovish signals on liquidity lifted sentiment across the sector.
Capri Global jumped 15.2%, Five Star rose 9.2%, and Edelweiss climbed 8%. IIFL gained 7.5%, Bandhan Bank added 7.1%, and Geojit Financial advanced 6.9%. JM Financial, Arman Financial, and Fedfina were up 6.7%, 6.5%, and 5.9%, respectively. Among small finance banks, ESAF gained 5.8%, Utkarsh 4.6%, and Jana Small Finance 5.7%. RBL Bank added 5.3%, Fusion rose 5.2%, and IREDA was up 5.2%. Wealth and asset managers such as UTI AMC and SMC Global rose 4.3% and 4.4%, respectively, while MCX gained 6.8%.
The RBI also relaxed norms for microfinance lenders and small finance banks, further boosting the outlook for the broader sector. For NBFC-MFIs, the qualifying asset criteria were eased, allowing them to diversify up to 40% of their portfolio beyond microloans. This is expected to reduce concentration risk, improve balance sheet resilience, and enhance earnings stability.
For small finance banks, lower risk weights on microfinance loans will reduce capital requirements and expand lending capacity.
These moves, combined with a supportive macro environment, are expected to aid credit growth and financial inclusion across underserved segments.
'For NBFCs that operate extensively in tier 2 and tier 3 towns, this policy move opens up new momentum for credit-led expansion. The broader implication of this rate cut cycle is significant as it reflects a forward-looking strategy that is aligned with India's vision for inclusive and sustained growth.
As highlighted by the RBI Governor, this brings the country a step closer to the goal of Viksit Bharat 2047. With rural resilience and continued expansion in services, both urban and rural consumption are poised to become strong drivers of India's next growth phase,' said Umesh Revankar, Executive Vice Chairman, Shriram Finance.
Emkay Global said in a research note, 'The RBI heard the practical challenges of the new gold loan rules and adjusted them accordingly.
We see this as a sign of the regulator wanting to remove friction in banks' and NBFCs' ability to lend, as far as possible.'
According to
Vivek Singh
, CEO, Home Credit India, 'The recognition of abating stress in unsecured personal loans and ongoing recalibration efforts reinforces our commitment to robust underwriting and collection practices, supporting a healthier credit environment and India's growth.'
George Alexander Muthoot, MD, Muthoot Finance, said, 'For NBFCs, this is an encouraging move as it creates a favourable environment by lowering borrowing costs and extending affordable credit to underserved communities. The move, coupled with a lowered inflation outlook, is likely to support domestic consumption and stimulate credit demand in the coming quarters. Overall, we view this as a timely and positive intervention that can support a stronger credit cycle in FY26.
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(2019) FRONT PAGE Weighing 337 tonnes, Union Carbide waste incinerated, residue burial in landfill cells Syllabus: Preliminary Examination: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc. Mains Examination: General Studies II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation. What's the ongoing story: The entire 337 tonnes of waste from the now-defunct Union Carbide factory in Bhopal has been incinerated, officials said on Monday. 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What's the ongoing story: Pulapre Balakrishnan and Aman Raj writes: In 2023-24, upto 40 per cent of rural population and 10 per cent of urban population could not afford two thalis a day, indicating that levels of food deprivation are much higher than implied by poverty estimates Key Points to Ponder: • What are the limitations of using calorie intake as the sole measure of poverty? • What is the Thali Index? • How thali index can better reflect the ground reality of food affordability and poverty in India? • How food inflation disproportionately affects the poor and the implications for poverty measurement? • Know the shift from calorie-based poverty measures to expenditure-based and multidimensional measures in India. • How can region-specific thali index data help policymakers address inequality and ensure nutritional security? Key Takeaways: Pulapre Balakrishnan and Aman Raj writes: • The publication of the survey of household consumption expenditure for 2023-24 by the National Statistics Office in January 2025 has been followed by a flurry of estimates of poverty in India. • Of these, two have received the most attention. The first off the block was a report from SBI in January, which was followed by one from the World Bank. They report more or less similar findings. • The former flags 'a remarkable decline in rural poverty, estimated at 4.86 per cent in FY24… urban poverty estimated at 4.09 per cent'. The World Bank's report is far more optimistic, pegging 'extreme poverty' at 2.8 per cent for rural India and 1.1 per cent for urban India in 2022-23. If poverty in India is what these estimates show, it would be a matter for rejoicing, as it would have been virtually eradicated. • These estimates of poverty have brought forth many responses. The Narendra Modi government's votaries have been quick to claim that the outcome reflects the success of its policies. Critics have focused on the non-comparability of the latest consumption data with those for 2011-12 as the survey methods have undergone change since. Both neglect the issue of the standard of living in India, and whether the extant methodology of poverty measurement underlying these estimates can lead to anything at all being said on the matter. • Given the centrality of the thali in Indian life, it would be appropriate to treat it as the metric by which to measure the standard of living. This implies measuring the standard of living in terms of food, but then we believe that the level of food consumption should be treated as its most important constituent. • The price of a thali at Rs 30 was taken from the rating agency Crisil, which calculates the cost of a home-cooked thali using data on the cost of its ingredients sourced from the east, west, north and south of India. The value of food consumption per capita given in the consumption survey for 2023-24 was expanded to include items purchased from the public distribution system and items received free as part of social welfare programmes. Do You Know: Pulapre Balakrishnan and Aman Raj writes: • Officially approved poverty measurement in India has involved estimating the level of consumption expenditure sufficient to enable the minimum calorie intake necessary for living and working. 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Leaders such as Union Minister Shivraj Singh Chouhan, Assam Chief Minister Himanta Biswa Sarma, and RSS general secretary Dattareya Hosabale have echoed the VP's critique in recent days. Key Points to Ponder: • What is the Preamble of the Constitution? • How did the words 'socialist' and 'secular' come in the Preamble? • What about the word 'secular'? • Wasn't secularism already an integral part of the Constitution even before the 42nd Amendment? • Has this issue been discussed earlier too? • How else has the preamble been debated earlier? • Under what circumstances was the preamble amended? • Were 'secular' and 'socialist' debated before Independence? • How is western concept of secularism different from the Indian concept? • Read about the fundamental duties and Directive Principles of State Policy provided in the Indian Constitution. • What is the doctrine of basic structure? • What were Kesavananda Bharati (1973) and Minerva Mills v Union of India (1980) ruling? 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While the Janata government reversed most of these changes through the 44th Amendment in 1978, the Preamble was left untouched. • The Preamble is a vision statement to the Constitution, or as the Supreme Court described in its 1961 ruling in In Re: The Berubari Union, 'a key to open the mind of the makers' of the Constitution. • In 1950, when the Constitution was adopted, the Preamble read: 'We, the People Of India, having solemnly resolved to constitute India into a Sovereign Democratic Republic' that would secure to all its citizens 'Justice… Equality… Liberty… and Fraternity'. • The 42nd Amendment in 1976 changed this to '…Sovereign Socialist Secular Democratic Republic…' and added the expression 'integrity' to the description of fraternity as a right, which now reads 'assuring the dignity of the individual and the unity and integrity of the Nation…'. • These were just a few of a whole host of changes made by the 42nd Amendment, which introduced the chapter on Fundamental Duties, added new Directive Principles on State Policy, diluted powers of judicial review, and froze delimitation. • With Indira Gandhi taking an explicit leftward turn — she nationalised banks in 1969, abolished privy purses in 1971, and romped to victory in Lok Sabha polls later that year with 'Garibi Hatao' ('End Poverty') as her campaign slogan — the inclusion of 'socialist' was to indicate the Constitution's alignment with the Prime Minister's economic roadmap. Do You Know: • The words 'socialist' and 'secular' from the preamble of the Indian Constitution. The two terms were inserted into the preamble as part of the 42nd Amendment of the Constitution in 1976 during the Emergency imposed by then Prime Minister Indira Gandhi. • Secularism is a theme that permeates through the Constitution in several other provisions. For instance, secularism is a key facet of the right to equality enshrined in Article 14 of the Constitution. Article 15 explicitly prohibits discrimination based on religion, race, caste, sex, or place of birth. Article 16 guarantees equality of opportunity in matters of public employment. • These rights against the state make the Constitution inherently secular. This view has repeatedly been emphasised by the Supreme Court. Even before the 42nd amendment altered the Preamble, a 13-judge bench in the landmark 1973 Kesavananda Bharati ruling held that secularism is a basic feature of the Constitution that cannot be done away with. • In the 1994 Bommai ruling, that dealt with Centre-State relations, the SC again upheld secularism as a basic feature of the Constitution. • In another landmark ruling in 1980, Minerva Mills v Union of India, which also debated more constitutional amendments made during the Emergency, the Court recognised 'socialism' was a constitutional ideal for the framers. It cited Part IV of the Constitution, which deals with Directive Principles of State Policy, a non-enforceable policy outline for the state that has several socialist ideas. Other Important Articles Covering the same topic: 📍UPSC Issue at a Glance | 50 Years of Emergency: From causes to constitutional implications Previous year UPSC Mains Question Covering similar theme: 📍How is the Indian concept of secularism different from the western model of secularism? Discuss. (UPSC CSE 2016) WHY CANADA MADE A U-TURN ON ITS CONTENTIOUS DIGITAL SERVICES TAX Syllabus: Preliminary Examination: Current events of national and international importance. Mains Examination: General Studies II: Effect of policies and politics of developed and developing countries on India's interests What's the ongoing story: In a bid to restart stalled trade negotiations with the United States, Canada scrapped its Digital Services Tax (DST) hours before it was due to take effect on Monday. Key Points to Ponder: • What was the DST? • Why did Canada consider imposing a Digital Services Tax? • What does Canada's U-turn mean? • Know the conflict between unilateral digital taxes like Canada's DST and multilateral frameworks such as OECD's global tax deal. • What are the main challenges of taxing digital services in a globalized economy? • Compare and contrast India's Equalisation Levy and Canada's DST proposal in terms of scope, intent, and global reception. Key Takeaways: • Calling the DST 'a direct and blatant attack' on the US, President Donald Trump had on Friday announced the termination of all trade discussions with Canada. With the contentious tax out of the way, talks between Washington and Ottawa will likely resume. • The DST was a 3% levy on the digital services revenue a firm made from Canadian users above $20 million in a calendar year. Controversially, the tax was set to be retroactively implemented beginning 2022. • This would have had a significant impact on American technology giants such as Google, Meta, Apple, and Amazon — American tech companies would have had to pay roughly $2.7 billion to the Canadian government, if the tax were to be implemented, The New York Times had reported. • 'The DST was announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on revenues generated from Canadians…,' Canada's finance ministry said in its statement. Do You Know: • Canada is the United States' second-largest trading partner after Mexico, and the largest buyer of US exports. 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