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B&K Securities said the first installment payment should reduce Bandhan Bank’s cost of credit for the December quarter.
To buy to sell Bandhan Bank to share
Bandhan Bank shares gained more than 3% on Tuesday after the private sector lender informed stock exchanges that it had received the first tranche of money under the government’s Micro Credit Guarantee Fund. -units (CGFMU) amounting to Rs 916.61 crore.
The Micro Unit Credit Guarantee Fund is the trust fund set up by the Government of India for the purpose of ensuring payment in the event of default on micro loans made to eligible borrowers by banks and other financial intermediaries.
The objective of the credit guarantee system is to provide comfort to banks so that institutional credit is extended to micro and small enterprises, in particular without guarantees or guarantees from third parties. Micro-loans up to Rs 10 lakh in manufacturing or service sectors, including retail, and loans for agricultural related activities are eligible to be covered by the credit guarantee fund.
Notably, Bandhan Bank is expected to receive a total of Rs 2,500 crore under this scheme. The next tranche of money is now due in the first quarter of fiscal year 2024.
Commenting on the development, financial services firm B&K Securities said the first installment payment is expected to reduce Bandhan Bank’s cost of credit for the December quarter to around Rs 1,500 crore (vs. the possible Rs 2,400 crore).
Shares of Bandhan Bank are trading up 1.1% at Rs 249.70.
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