NBFC Stocks Slide up to 5% as RBI's New CRR Rules Spark Borrowing Concerns

14 Oct 2026 , 04:35 PM

Shares of non-banking financial companies (NBFCs) and housing finance companies fell on Wednesday, as investors evaluated the implications of new Reserve Bank of India guidelines on cash reserve ratio for maintenance on banking system liquidity and funding costs. LIC Housing Finance led the declines, shedding 5.13% to ₹535.05. Shriram Finance fell 4.03% to ₹948.20 and HDB Financial Services was down 4.02%. Cholamandalam Investment and Finance Company, L&T Finance and Tata Capital were also trading lower.

The concern is straightforward: if banks have to keep more money with the RBI on a daily basis, less liquidity may be available for other uses. That could push up funding costs for lenders, including NBFCs that depend on bank borrowings.

NBFC Stocks Under Pressure: Share Price Performance

Company	Share price	Change
LIC Housing Finance	₹535.00	-5.14%
Shriram Finance	₹950.00	-3.85%
HDB Financial Services	₹584.55	-4.02%
Cholamandalam Investment and Finance Company	₹1,563.00	-3.56%
L&T Finance	₹258.80	-3.29%
Tata Capital	₹316.90	-3.28%
Bajaj Finance	₹957.00	-2.62%
Bajaj Finserv	₹1,721.70	-1.94%
Muthoot Finance	₹2,580.00	-1.75%

What Has the RBI Changed in CRR Rules?

Banks are now required to maintain 99% of their prescribed CRR requirement on a daily basis, up from the earlier requirement of 90%. The statutory CRR itself remains unchanged at 3% of net demand and time liabilities (NDTL).

CRR is the portion of banks’ deposits that must be maintained as cash with the RBI. The revised daily requirement changes how closely banks must maintain this reserve during the reporting period, even though the headline CRR rate has not increased.

The potential concern is the amount of liquidity banks may need to keep readily available to meet the stricter requirement.

Jefferies Estimates ₹40,000–₹80,000 Crore Liquidity Impact

According to Jefferies, the revised norms could withdraw ₹40,000 crore to ₹80,000 crore from the banking system if banks increase their balances maintained with the RBI by 5–10%. The brokerage estimates that the change could add around 1–2 basis points to banks’ cost of funds. While the estimated increase is small, it could matter for NBFCs if banks pass on higher funding costs through their lending rates.

The impact is unlikely to be uniform across the sector. It will depend on how much each NBFC borrows from banks, its access to other funding sources and its ability to adjust loan pricing.

Why Could NBFC Margins Come Under Pressure?

NBFCs borrow money from lenders to give loans to individuals and businesses. If the cost of borrowing increases, their profits from lending may fall because they pay more interest on the money they borrow. This reduces their Net Interest Margin (NIM), unless they increase the interest rates charged to borrowers or find other ways to cover the higher costs.

It could be even more challenging for those which are highly dependent on banks for funds or have limited ability to reprice outstanding loans. Meanwhile, firms with diversified sources of funding may be better able to withstand the squeeze.

For now, the market’s response has been concerned with a possible change in funding conditions.

Jefferies Prefers Banks Over NBFCs

Jefferies expects the immediate effect of the revised CRR maintenance rules on banks’ net interest margins to remain limited. Banks may be able to pass some of the marginal increases in marginal funding costs on to borrowers. The brokerage favors banks over NBFCs in a rising rate scenario, citing the differences in their funding structure and ability to hedge borrowing costs.

For NBFCs, the key variables would include the tightness of any liquidity squeeze, the cost of bank credit, and the ability to quickly pass on higher expenses to customers.

What Should Investors Watch?

The next few developments will help determine whether Wednesday’s sell-off has a lasting impact on the sector. Investors will need to track banking-system liquidity, lending rates and borrowing costs, along with individual NBFCs’ funding mix and quarterly margins.

The CRR maintenance change does not raise the statutory CRR rate from 3%. Its potential effect comes from the stricter daily requirement and how banks respond to it. Until the effect on actual funding costs becomes clear, the pressure on NBFC stocks remains a concern about potential margin compression rather than a confirmed earnings downgrade.

 

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