Manappuram Finance Shares Fell Over 3% on Monday: Check Why?

On Monday, October 21, 2024, Manappuram Finance shares dropped over 3%, reaching a low of ₹145.50 by 11:09 AM. This decline followed a significant 13.08% decrease to ₹154.20 on Friday, October 18, 2024, after the Reserve Bank of India (RBI) imposed regulatory restrictions on its subsidiary, Asirvad Micro Finance.

The RBI announced on Thursday that it has barred four non-banking financial companies (NBFCs), including Asirvad Micro Finance, from approving or disbursing loans starting October 21, 2024. This decision stemmed from concerns about the excessive pricing policies of these NBFCs, which did not comply with RBI regulations. Issues included high Weighted Average Lending Rates (WALR), improper assessment of household income and repayment capabilities, deviations in Income Recognition & Asset Classification (IR&AC) standards, and failure to meet required disclosure obligations.

In addition to the loan sanctions, Asirvad Micro Finance, along with Arohan Financial Services, DMI Finance, and Navi Finserv, was found to be in violation of regulatory guidelines regarding gold loan portfolios, outsourcing of essential financial services, and other areas.

The restrictions will be reassessed once the NBFCs confirm they have taken appropriate corrective actions to comply with the regulations.

In response to RBI feedback, Manappuram Finance has promptly acted to address the highlighted issues. The board has convened an urgent meeting to discuss and implement necessary measures, with a detailed corrective action plan set to be submitted to the RBI within the required timeframe.

Based in Kerala, Manappuram Finance is an NBFC that offers a variety of financial services, including gold loans and money exchange.

The company’s board will review its Q2 results on November 5, 2024. For Q1 ending June 2024, net profit increased by 11.84% to ₹554.62 crore, alongside a 22.11% rise in total income to ₹2,511.93 crore compared to the same quarter in the previous year.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.