India's general elections are set to conclude in May. The Bharatiya Janata Party, which is leading in opinion polls, has not clarified its stance on the expansion of the banking sector.
"On-tap approvals are highly unlikely because we will have a new government soon, and who knows what policies they might have," said Phani Sekhar, a fund manager at Angel Broking.
IDFC shares were up 1 percent, while LIC Housing shares were down 1 percent and L&T Finance stock was down 9 percent at 0654 GMT. The benchmark BSE index was down 0.5 percent.