IDFC Ltd rallied as much as 4.93 per cent in trade on Wednesday, after the Reserve Bank of India (RBI) allowed banks to raise long-term funds to lend to affordable housing and infrastructure.
IDFC, which is a leading finance company especially for infrastructure sector obtained a banking license back in April, is seen as one of the main beneficiaries of the measures.
The seven-year bond with no secondary market trading option can be issued by banks at a fixed or variable rate. Additionally, the bonds will not attract any statutory pre-emption such as cash reserve ratio (CRR) or statutory liquidity ratio (SLR).
Currently, the funds raised by IDFC are subject to several regulatory requirements. However, with the new proposal, banks will be on par with other infrastructure financing companies in terms of lending to this segment.
IDFC, which is a leading finance company especially for infrastructure sector obtained a banking license back in April, is seen as one of the main beneficiaries of the measures.
The seven-year bond with no secondary market trading option can be issued by banks at a fixed or variable rate. Additionally, the bonds will not attract any statutory pre-emption such as cash reserve ratio (CRR) or statutory liquidity ratio (SLR).
Currently, the funds raised by IDFC are subject to several regulatory requirements. However, with the new proposal, banks will be on par with other infrastructure financing companies in terms of lending to this segment.
RBI's relaxation on regulatory asset-allocation norms for banks on loans to infrastructure and affordable housing may allow them to lower lending rates for such loans by 150-200bps without compromising on spreads
It is a big positive as against base case scenario of RoE remaining below 10 per cent, brokerage firm, Edelweiss said in a report. Its RoE can scale up to over 12 % by FY19, added the report.
It is a big positive as against base case scenario of RoE remaining below 10 per cent, brokerage firm, Edelweiss said in a report. Its RoE can scale up to over 12 % by FY19, added the report.
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