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    NBFC shares gain as RBI grants extension to comply with new NPA norms; M&M Financial up 8%

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    NBFC shares gain as RBI grants extension to comply with new NPA norms; M&M Financial up 8%

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    Shares of non-banking financial companies (NBFC) gained on Tuesday after the Reserve Bank of India (RBI) granted NBFCs an extension to comply with its new regulations for upgrading non-performing assets (NPAs) to standard ones.

    Shares of non-banking financial companies (NBFC) gained on Tuesday after the Reserve Bank of India (RBI) granted NBFCs an extension to comply with its new regulations for upgrading non-performing assets (NPAs) to standard ones.
    Shares of M&M Financial were the top gainer on the Nifty Financial Services index, rising nearly 8 percent to Rs 165.30 on the NSE.
    Power Finance Corporation Ltd. rose 2.2 percent to Rs 123, Shriram Transport Finance Co. Ltd. was up 4 percent to Rs 1,260.10, Bajaj Finance Limited rose 1.2 percent to Rs 7,224 and L&T Finance Holdings Ltd was up 3.6 percent to Rs 74.70.
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    The Reserve Bank of India (RBI) on Tuesday extended the deadline for NBFCs to comply with new asset classification norms issued on November 12.
    Non-bank lenders will now be allowed to move to the new rules for recognising bad loans by September 30, 2022, as against March 31, 2022.
    The new rules are widely expected to deteriorate the asset quality of NBFCs as reflected in the earnings in the quarter ended December.
    Following representation from NBFCs, in a revised circular issued on Tuesday, the central bank said, "The new circular does not, in any way, interfere with the extant guidelines on the implementation of Ind-AS by NBFCs... loan accounts classified as NPAs may be upgraded as 'standard' asset only if the entire arrears of interest and principal are paid by the borrower. (Also), NBFCs shall have time till September 30, 2022, to put in place the necessary systems to implement this provision."
    M&M Financial Services had guided investors that it may take management overlay provisions of Rs 500 crore to Rs 1,500 crore in the March quarter to comply with the new guidelines. Brokerage firm Morgan Stanley India reportedly said that the company may no longer need such provision after the extension of the deadline.
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