IDFC builds as RBI lays new bricks
IDFC is a big gainer on the bourses currently, up over 4% at Rs.156.35, closer to its intra day high at Rs.158. Six days ago, on Budget day, the stock had hit a new 52-week high at Rs.159.75.
The stock is up, reacting to RBI yesterday announcing sops for infra loans. RBI has stated that banks will not have to maintain a Cash Reserve Ratio (CRR) or Statutory Liquidity Ratio (SLR) – this was something which the FM had announced in the Budget, RBI went on to implement it. The other sweetener was that banks will no longer have to meet priority sector lending targets for funds raised through bonds for extending credit to these sectors.
RBI has also allowed banks to raise long term bonds and this means infra companies will now be raise funds at much lower costs. Currently infra companies borrow with a tenure of 2-3 years while the gestation period for their assets maturity is around 15 years. This mismatch, often leading to re-financing, exposing them to vagaries of macroeconomic factors and volatile interest rates, will now be removed.
This facility will be allowed only for loans sanctioned after 15th July and will not be extended to existing projects or even those currently under implementation.