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<ul><li>Unsecured <keyword id="35520" type="General" weightage="50" keywordseo="personal-loans" source="Orion">personal loans</keyword> account for 37% of Bajaj Finance’s loan book, while it is at 21% for Aditya Birla Capital and it is 27% for IIFL (standalone).</li><li>Tighter norms may impact <keyword id="6357120" type="General" weightage="80" keywordseo="paytm" source="Orion">Paytm</keyword>’s break-even timelines if there is a slowdown in loan disbursals.</li><li><keyword id="706950" type="General" weightage="50" keywordseo="aditya-birla-finance" source="Orion">Aditya Birla Finance</keyword> and IIFL may need to infuse capital after the November 16 tightening of capital norms by RBI. </li></ul>Reserve Bank of India’s <a href="https://www.businessinsider.in/finance/news/rbi-tightens-norms-on-personal-loans-for-banks-and-nbfcs-stock-reaction/articleshow/105277492.cms" data-type="tilCustomLink" target="_blank">crackdown on personal loan disbursals</a> by banks and non-banking finance companies will have a cascading effect on the sector. But the worst hit will be non-bank players as they will be hit on both asset and the liability sides. While they will have to pay higher rates while borrowing from banks and bond markets, they will also have to pass on higher costs to borrowers. This will slow down the rapid growth in their balance sheet, which has been driven by rapid growth in the disbursement of unsecured personal/consumer loans. According to analysts, non banking finance companies like Paytm and Bajaj Finance would be most affected by RBI’s move to tighten capital norms on unsecured loans and also loans disbursed to non banks. This will not only make lending more expensive for non banks but in many cases will also force them to raise more capital ahead of schedule. <keyword id="116253" type="General" weightage="80" keywordseo="sbi-cards" source="Orion">SBI Cards</keyword>, Bajaj Finance, IIFL and Aditya Birla have relatively higher proportion of unsecured loans on their portfolio and, therefore, tighter capital norms will impact them the most. Unsecured personal loans account for 37% of Bajaj Finance’s loan book, while it is 21% for Aditya Birla Capital and it is 27% for IIFL (standalone), according to Jefferies. According to Jefferies, SBI Cards can see an estimated.400 basis points cut in its Tier 1 capital adequacy ratio while Bajaj Finance can see 220 basis point hair cut to Tier 1 CAR. However, both NBFCs are well capitalised and have higher return on equity (low capital consumption). “IIFL (standalone entity) and Aditya Birla Capital can see a 50-80 bps haircut to Tier 1 capital, which can lower their Tier 1 to 13%/15%. IIFL may need to infuse capital in the standalone entity; at ABFL, next phase of capital raise may get advanced,” the global investment bank said in a report. in funding costs. SBI Cards faces highest drag on Tier I CAR and highest dependence on bank-funding. The tighter norms will not impact NBFCs but even fintechs like Paytm. Loan disbursals by fintechs will also slow down from the current levels as they may find it hard to raise funds and even pass on higher cost loans to consumers. Japanese investment bank Nomura says in a report, that in the past 18 months, nearly 25%-30% of incremental growth for NBFCs has come from unsecured retail. Any moderation in unsecured credit for NBFCs will hence have an impact on both growth and profitability for NBFCs in our view. Moreover, the regulatory action comes at a time when credit costs in these segments have started to inch up. For Paytm's lending partners, higher funding costs and increased capital requirements will affect product profitability in the buy-now-pay-later and personal loans segments. Non bank lenders like private banks may also start to improve their underwriting standards after this which will impact overall growth. Jefferies says: “We also watch out for the pricing environment and ability of Paytm to pass-through hike in funding costs. In our base case earnings, we forecast consumer loan disbursal growth to normalise from 90% in FY24 to 40% in FY25 and 35% in FY26. Any additional 10 percentage point slower disbursal growth (vs. base case) in FY25/26E can lead to 5-10% impact on lending revenues and ~2-3% impact on overall contributions, which may impact break-even timelines as well. Paytm may be able to compensate for this through faster ramp-up of its merchant financing business.” ALSO READ: <a href="https://www.businessinsider.in/personal-finance/news/the-dark-truth-behind-rbis-crackdown-on-easy-personal-loans/articleshow/105287366.cms" data-type="tilCustomLink" target="_blank">The dark truth behind RBI’s crackdown on easy personal loans</a>

RBI crackdown on personal loans – Bajaj Finance, IIFL, Aditya Birla and SBI Cards to take a bigger hit, say analysts

<ul><li><keyword id="68683" type="General" weightage="20" keywordseo="sanjiv-bajaj" source="Orion">Sanjiv Bajaj</keyword>, the chairman of <keyword id="85462" type="General" weightage="20" keywordseo="bajaj-finserv" source="Orion">Bajaj Finserv</keyword> has said that his company will come out with a ‘right to be forgotten’ feature for users who want to opt out of its marketing calls. </li><li>RBI deputy governor when asked said on Thursday that the telecom regulator is the right authority to deal with the issue. </li><li><keyword id="6358511" type="General" weightage="20" keywordseo="bajaj" source="Orion">Bajaj</keyword>’s plan to offer a parallel <keyword id="5984827" type="General" weightage="20" keywordseo="do-not-disturb" source="Orion">do-not-disturb</keyword> (<keyword id="311748" type="General" weightage="20" keywordseo="dnd" source="Orion">DND</keyword>) feature has angered the <keyword id="639251" type="General" weightage="20" keywordseo="twitterati" source="Orion">Twitterati</keyword>. </li></ul> A day after Sanjiv Bajaj, the chairman of Bajaj Finserv stirred the hornet’s nest by promising that his company will bring down marketing calls with a ‘new feature’ in three months, India’s banking regulator RBI said that the telecom regulator is the right authority to address the issue, when posed a question at a press conference but added that it will look into it as the question has been raised. Bajaj said that his company would bring either a feature on its website or an app wherein people who do not want to receive calls can register. The feature is to be called ‘right to be forgotten’. "You will see, in three months' time, on our website and our web app will be an option – you click it – we will never bother you again. You'll have the right to be forgotten by us but then make sure you don't come back to us for our products and solutions," Bajaj said on Wednesday with reference to a question on cross-selling of financial products to existing customers. When the RBI was asked to comment on customer service standards, the central bank said there were rules which apply to telemarketers and recovery agents. The Telecom Regulatory Authority of India (TRAI) has a Do Not Call registry where customers can register their numbers if they do not wish to be disturbed. However, it does not make the distinction between receiving calls for transactions and calls by telemarketers. “On the calls as far as recovery agents are concerned we have already issued our guidelines and put out a code as to what they have to follow. As a marketing tool, it’s the decision of the individual bank and the TRAI has to look into as there is a do not call registry. Now that you have brought it up, we will look into it,” M K Jain, deputy governor of the Reserve Bank of India (RBI) told at a press conference following <a href="https://www.businessinsider.in/finance/news/rbi-mpc-holds-interest-rate-as-expected-but-stance-maintained-at-withdrawal-of-accommodation/articleshow/100839034.cms">monetary policy committee decisions</a>. TRAI is the telecom regulator which has set up a Do Not Call registry wherein users can opt out of marketing calls. However, it’s without teeth since most agencies break the registry rules, spamming consumers with unwanted calls and offers. A survey by <a href="https://www.localcircles.com/a/press/page/unwanted-phone-calls-survey">Localcircles claims that </a>two in three people get at least three pesky calls per day. Opt out? When did we opt in?, ask Twitterati Amongst the sea of real estate project updates and credit card offers that come via calls, Bajaj Finance’s calls have stood out in volume and persistence. Its aggressive marketing tactics have amused, angered and irritated Twitterati — which is rife with memes and updates from its agents offering loans. Bajaj’s recent move to run a parallel DND has annoyed the Twitterati, even more. “Can’t believe Sanjiv Bajaj of Bajaj Finance said you can opt out of our telemarketing calls, but don’t come back to us for loans. As if the loans they are selling are part of Charitable Services. It’s their business and they are making money out of it,” said @joydas, a Twitter user. “What is opt out? When did we opt in? Does Bajaj Finance only call people who need a loan. Are there no other loan providers?” said Debashis Basu of Moneylifers. The Twitterati was also sarcastic of Bajaj’s ‘magnanimous concession’ to those bothered by calls. “Bajaj Finance is primarily a spamming company and only secondarily a finance company. Ask anyone and they will tell you about it,” said another Twitter user. A lot of companies’ customer service or the lack of it has been a hot topic across social media. Be it endless harassment via calls, selling wrong products to customers and irate lack of redressal — are now being taken <a href="https://www.businessinsider.in/personal-finance/news/ulips-are-not-for-senior-citizens-heres-how-to-pick-the-right-investments-to-secure-the-golden-years-of-your-life/articleshow/100591746.cms">up by regulators </a>and companies alike, as it’s becoming tough to ignore.

After Twitterati scream foul about pesky calls, RBI says 'will look into it'

<ul><li>Sensex dropped nearly 115 points in early trade on Thursday. </li><li>Weak rupee and persistent foreign capital outflows impacted domestic equity market sentiments, traders said. </li><li><keyword id="6912" type="General" weightage="100" keywordseo="maruti" source="Orion">Maruti</keyword> was the top loser in the Sensex pack, shedding 1.31%, followed by <keyword id="42747" type="General" weightage="80" keywordseo="tata-motors" source="Orion">Tata Motors</keyword>, <keyword id="85462" type="General" weightage="80" keywordseo="bajaj-finserv" source="Orion">Bajaj Finserv</keyword>, SBI, Bharti Airtel, <keyword id="6407278" type="General" weightage="50" keywordseo="kotak-bank" source="Orion">Kotak Bank</keyword>, Axis Bank and Reliance Industries.</li></ul>Mumbai, Equity benchmark Sensex dropped nearly 115 points in early trade on Thursday tracking losses in index heavyweights Maruti, Tata Motors and Reliance industries amid mixed global cues. Besides, a weak rupee against major rivals and persistent foreign capital outflows impacted domestic equity market sentiments, traders said. In a volatile trade, the 30-share BSE index was trading 113.77 points or 0.19 per cent lower at 60,550.02 in early deals. Similarly, the broader <keyword id="372424" type="General" weightage="50" keywordseo="nse-nifty" source="Orion">NSE Nifty</keyword> slipped 63.70 points or 0.36 per cent to 17,808. Maruti was the top loser in the Sensex pack, shedding 1.31 per cent, followed by Tata Motors, Bajaj Finserv, SBI, Bharti Airtel, Kotak Bank, Axis Bank and Reliance Industries. On the other hand, L&amp;T, <keyword id="111876" type="General" weightage="50" keywordseo="bajaj-finance" source="Orion">Bajaj Finance</keyword>, Infosys, PowerGrid and <keyword id="6357150" type="General" weightage="50" keywordseo="tcs" source="Orion">TCS</keyword> were the major gainers. Meanwhile, shares of Adani Power fell 5 per cent to 172.90 apiece on BSE in early deals, after the company on Wednesday reported a 96 per cent decline in consolidated net profit at Rs 8.77 crore for the December quarter. Edible oil major Adani Wilmar Ltd edged lower by 1.79 per cent to 411.85 per scrip, despite the company reporting a 16 per cent increase in its consolidated profit to Rs 246.16 crore for the third quarter ended December 2022. <keyword id="6367820" type="General" weightage="80" keywordseo="adani-group" source="Orion">Adani Group</keyword>'s flagship Adani Enterprises was trading 5.56 per cent down at Rs 2038.55 apiece on BSE. According to the RBI, domestic banks' exposure to the Adani Group is "not very significant", and the system is strong and large enough to not get impacted by a single case. Meanwhile, France's TotalEnergies has put on hold a planned investment in Adani Group's USD 50 billion hydrogen project pending results of an audit launched following allegations by a US short-seller, chief executive Patrick Pouyanne said on Wednesday. On Wednesday, the 30-share BSE Sensex rose by 377.75 points or 0.63 per cent to close at 60,663.79 and the broader Nifty of the NSE spurted by 150.20 points or 0.85 per cent to settle at 17,871.70, after the Reserve Bank of India (RBI) hiked the repo rate by 25 basis points. Elsewhere in Asia, bourses in Hong Kong, Shanghai and Seoul were trading with gains in mid-session deals while the Tokyo market closed in the negative territory. Equities on Wall Street ended significantly lower in the overnight trade. Meanwhile, the international oil benchmark Brent slipped 0.11 per cent to USD 85 per barrel. Foreign Institutional Investors (FIIs) were net sellers in capital markets as they offloaded shares worth Rs 736.82 crore on Wednesday, according to exchange data. RBI projected India's economic growth at 6.4 per cent for 2023-24, broadly in line with the estimate of the Economic Survey tabled in Parliament last week. It also estimated retail inflation to ease to 5.3 per cent in the next fiscal from 6.5 per cent this year on assumptions of lower imported inflation, even though core inflation remains sticky. The RBI's decision to hike the repo rate by 25 basis points was on expected lines but the policy focuses more on inflation despite the recent moderation in the number, bankers said on Wednesday. Analysts are of the view that after delivering the seventh hawkish policy on Wednesday, the central bank may pause after delivering a likely 25 basis points increase in the April review.

Sensex drops 115 points in early trade tracking losses in RIL, Maruti, & Tata Motors

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RBI crackdown on personal loans – Bajaj Finance, IIFL, Aditya Birla and SBI Cards to take a bigger hit, say analysts

Malini Bhupta

After Twitterati scream foul about pesky calls, RBI says 'will look into it'

Katya Naidu

Sensex drops 115 points in early trade tracking losses in RIL, Maruti, & Tata Motors

PTI

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