homevideos Newsmarket Newsstocks NewsAssam cuts budget allocation to MFI relief scheme; here's what it means for Bandhan Bank
Assam cuts budget allocation to MFI relief scheme; here's what it means for Bandhan Bank
Macquarie has maintained a 'neutral' call on the Bandhan Bank stock with a target price of Rs 320.
Last week the Assam government cut budget allocation sharply for the microfinance institution (MFI) relief scheme. The outlay was reduced to Rs 2,500 crore from Rs 7,500 crore earlier and microloan borrowers who have no overdue are to be compensated first.
Assam accounts for 10 percent of Bandhan Bank’s microloan portfolio. Bandhan Bank has a very high market share in the state of Assam. 60 percent market share comes to Bandhan Bank itself from microloans in Assam.
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Macquarie has put out a note on Tuesday morning saying that this announcement reduces the recoverability from Assam’s portfolio significantly. In Q3, the recovery from Assam relief scheme was less than 2 percent of the overall Assam portfolio and that could fall further in the months to come. So Macquarie prefers to stay on the sidelines and are underweight on the stock.
Macquarie has maintained a 'neutral' call on the Bandhan Bank stock with a target price of Rs 320.
Watch the accompanying video of CNBC-TV18’s Sonia Shenoy for more details.
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