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Shares in non-banking finance companies Muthoot Finance and Manappuram Finance on Friday jumped after the RBI on Thursday issued draft guidelines for setting up payment banks and small banks. After surging to the day’s high of ₹195.4, Muthoot Finance closed at ₹186.2, up 3.76 per cent over the previous day’s close. Manappuram Finance closed at ₹23.45, up 3.3 per cent. In early trade, the stock rose to a high of ₹24.
“The guidelines for setting up payment and small banks would definitely pave the way for NBFCs to emerge as small banks initially and later into larger ones,” says VP Nandakumar, Managing Director and CEO, Manappuram Finance.
This would probably be a beginning for NBFCs for an image makeover. However, NBFCs should get sufficient time to submit a road map in this regard.
The RBI guidelines, he said, are part of the Nachiket Mor Committee report to make effective regulations in the financial sector.
Need for niche banking With regard to giving license to a bank, it is up to the apex bank to see whether it is viable, he said. “I feel that the financial viability of these banks will be ensured by the regulator while framing rules,” he said. Welcoming the RBI decision to go ahead with setting up small banks and payment banks, George Alexander Muthoot, Managing Director, Muthoot Finance, pointed out that there is a need for niche, differentiated banking in the country.
Today what rural India needs are basic banking services and the RBI has rightly assessed this urgent need to bring the under-served and un-banked population in the bank net. This is the right step in extending financial inclusion, he said.
The company’s board will meet to discuss this development in detail, including the criteria laid down by the RBI.
“Muthoot Finance has always been at the forefront when it comes to financial inclusion and this is the right opportunity for us to make a difference,” he added.
Referring to share price fluctuations in the markets, Oommen K Mammen, Chief Financial Officer, Muthoot Finance, said it is sentiment-driven, and whenever there is positive action, there would be good response from investors. The company’s fundamentals and business models remains the same and nothing has changed overnight.
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