Manapuram and Muthoot slip

Muthoot Financial and Manappuram Finance are the top losers on the BSE, with both the stocks down almost 4%. Intra day, Muthoot fell over 7% while Manappuram declined over 5%.

Blame this fall fairly and squarely on the RBI. The central bank prescribed a limit of Rs20,000 for loan disbursements or repayments in cash.

This is with immediate effect and the market is more miffed with the rule that loans above Rs.20,000 can henceforth be disbursed only by cheque. This is a big jump from the earlier threshold limit of Rs.1 lakh and above.

The worry is that this revision will disrupt the workings of these NBFCs as they operate mostly in cash. They accept loan repayments some times in partial too or even fully in cash thus the worry that this move by RBI will impact their collections.