Indian shares declined on Friday amid a draft Reserve Bank of India proposal to tighten regulation of non-bank financial companies and rising concerns over Middle East tensions impacting crude prices, prompting caution among investors.
Indian shares ended the week lower on Friday after a draft Reserve Bank of India proposal to tighten rules on non-bank lenders collided with fresh unease over Middle East tensions, leaving investors wary across risk assets. The Nifty 50 closed at 24,570.65, while the Sensex finished at 78,491.02, according to market data cited in the lead report.
The biggest pressure came from financial stocks after the central bank proposed curbs on revolving credit products offered by non-bank financial companies. The draft, released on August 6, would push lenders towards standard term loans and is intended to improve transparency and risk control in retail lending. Bajaj Finance fell sharply as traders weighed the possible impact on its lending model, while Bajaj Finserv also came under selling pressure.
The proposal is part of a wider run of RBI moves this year to reshape supervision of the sector. In February, the central bank released draft amendments that would change how NBFCs are classified, using a more activity-based approach and creating a path for some lower-risk entities to leave the registration regime. In April, it also proposed a revised framework for identifying upper-layer NBFCs, including a possible asset-size threshold and the inclusion of some state-run entities. In June, the RBI separately suggested broader access for NBFCs to money markets, a move aimed at deepening funding channels.
The latest draft is also notable for what it does not cover. The central bank has proposed an exemption for NBFCs that are authorised to issue credit cards, which would spare lenders such as SBI Card and BoB Cards from the direct impact of the revolving-credit restriction. Even so, the broader message from regulators is that retail lending will face tighter scrutiny and more conservative risk management.
Geopolitical concerns added to the caution. Investors remained focused on the potential effect of rising Middle East tensions on crude prices, including the risk of disruption around the Strait of Hormuz. For India, which imports much of its oil, higher crude prices tend to feed worries about inflation and the trade bill. That helped keep sentiment fragile even as some large IT and auto stocks proved more resilient, limiting the market’s losses. The India VIX rose to 12.37, signalling a modest increase in nervousness.
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