NBFC Shares Tumble up to 5% After RBI Hikes Daily CRR Maintenance to 99%

Shares of non-banking financial companies (NBFCs) and housing finance firms came under heavy selling pressure, sliding up to 5% as market participants factored in the fallout from the Reserve Bank of India's (RBI) revised Cash Reserve Ratio (CRR) maintenance guidelines.

The regulatory tweak, which mandates scheduled commercial banks to adhere to a stricter daily cash reserve threshold, triggered fresh worries that bank liquidity could dry up and lift funding costs across the shadow banking ecosystem.

Key Stocks Under Selling Pressure

Housing financiers and retail asset lenders led the losses on Dalal Street:

• LIC Housing Finance: Plunged 5.14% to trade at ₹535.00.
• Shriram Finance: Slid 3.85% to ₹950.00.
• HDB Financial Services: Fell 4.02% to ₹584.55.
• Cholamandalam Investment and Finance Company: Dropped 3.56% to ₹1,563.00.
• L&T Finance: Declined 3.29% to ₹258.80.
• Tata Capital: Fell 3.28% to ₹316.90.
• Bajaj Finance: Shed 2.62% to ₹957.00, while Bajaj Finserv fell 1.94% to ₹1,721.70.
• Muthoot Finance: Dropped 1.75% to ₹2,580.00.

The Regulatory Shift Explained

Under the revised framework announced by the central bank, commercial banks are now required to maintain a minimum of 99% of their prescribed CRR requirement on each day of the reporting fortnight, up sharply from the earlier floor of 90%. The new rule becomes effective from the reporting fortnight beginning October 16, 2026.

While the headline statutory CRR remains unchanged at 3% of net demand and time liabilities (NDTL), the stricter daily maintenance eliminates the operational leeway banks previously enjoyed to manage cash deficits or surpluses across the fortnight. Because CRR balances kept with the RBI earn zero interest, holding higher and more rigid daily balances restricts lenders' ability to deploy capital into short-term lending facilities.

Liquidity Drain and Higher Borrowing Costs

Global brokerage Jefferies estimated that banks may need to raise their cash balances held with the RBI by 5% to 10% to comfortably comply with the 99% daily mandate. This adjustment is projected to absorb ₹40,000 crore to ₹80,000 crore (₹400 billion to ₹800 billion) of liquidity from the banking system.

Jefferies noted that while the direct impact on banks' net interest margins (NIMs) may be modest—increasing banks' cost of funds by an estimated 1 to 2 basis points—banks are likely to pass these incremental costs on to commercial borrowers.

What This Means for Indian NBFCs

NBFCs rely heavily on bank credit lines, term loans, and commercial paper subscriptions from scheduled banks to fund their onward retail and corporate loan portfolios.

A tighter interbank liquidity environment combined with rising wholesale rates could directly push up marginal borrowing rates for NBFCs. Because non-bank lenders face competitive caps on how quickly they can pass higher interest rates on to retail vehicle, housing, and personal loan customers, analysts fear any sustained increase in bank funding costs will compress NBFC lending spreads and eat into upcoming quarterly earnings.

Tags: Reserve Bank of India NBFCs LIC Housing Finance Shriram Finance Bajaj Finance Nifty Financial Services