Credit Access Grameen, Bajaj Finance, and Bajaj Finserv shares jump in trade; here is why

Equity benchmark indices, NIFTY50 and SENSEX, rallied on Thursday morning (January 2), led by strong buying in auto and IT stocks. However, NBFC stocks such as Bajaj Finance and Bajaj Finserv were trading with huge gains and were the top gainers, along with other micro-finance lenders.

The sudden surge in the share prices of microfinance lenders can be attributed to key regulatory developments for the lenders.

As per media reports, the self-regulatory authority of the microfinance sector, the Microfinance Industry Network, has deferred implementation of limiting lenders to three borrowers till April 1. The development is a key boost for all microfinance lenders as they lend to small borrowers with micro ticket sizes ranging from as low as ₹10,000 to ₹50,000.

The regulatory authority introduced a cap in November after microfinance lenders faced pain in certain pockets. The country’s largest microfinance lender by loan assets, Credit Access Grameen, reported a 46% YoY and 56% QoQ drop in net profits to ₹186 crore in Q2FY25. The MFI lender’s GNPA jumped from 0.7% in Q2FY24 to 2.4% in Q2FY24.

Following the development of removing the cap on MFI lenders, shares of Credit Access Grameen jumped 9% to ₹977 apiece, followed by Bajaj Finance (+3.4%) and Bajaj Finserv (3.2%) at noon.