The world of Manappuram Finance appears to be in the middle of a tornado as the company shares tanked, falling by over 12 per cent in the intraday trade of the last trading of this week.

RBI Bans NBFCs From Loan Disbursal

Manappuram Finance is one of the biggest names in the NBFC sector, and this development at the equity markets came to pass after the Reserve Bank of India (RBI) placed a ban on a tranche of 4 NBFCs, including Asirvad Micro Finance, Arohan Financial Services, DMI Finance Private and Navi Finserv from disbursing loans from October 21.

Amongst these NBFC, Asirvad Micro Finance, a Micro Finance Institution is a subsidiary of the aforementioned Manapurram Finance.

Ensuring Stability

RBI placed this ban on these Non-Banking Financial Corporations (NBFCs) This step, according to the RBI, was taken in order to ensure the stability and compliance of the financial sector.

This comes barely a week after the central bank governor, Shaktikanta Das, in his post-Monetary Policy Committee meeting, warned NBFCs on their way of functioning. Das has asked NBFCs to change their ways to ensure truncation of volatility to elude any major crisis.

Das even said that the central bank would take action when required. This move from the central bank therefore appears to be in line with the words of the RBI governor.

Manapurram Shares Tank

Now, when we look at the shares of the big name in question, Manappuram Finance Ltd's shares drowned in a pool of red on Friday, October 18.

At the time of writing, the NBFC's stock prices plummeted a monumental 12.93 per cent or Rs 22.93, compared to its closing on Thursday. This took the overall value of the shares to Rs 154.40.

In fact, just over the past 5 trading days, the Thrissur-based company's shares have stumbled by 16.58 per cent, dealing a major blow to one of the biggest players in the industry, which itself has flourished significantly in the recent past.