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Most bank stocks drop as RBI announces measures to drain excess liquidity

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Most public sector bank stocks dropped and private sector banks were mixed on the BSE after the central bank announced measures to drain excess liquidity after the government's move to withdraw legal tender status of Rs 500 and Rs 1,000 bank notes

Among public sector banks, (down 1.97%), State (down 1.72%), (down 1.44%), (down 1.21%), (down 0.88%), (down 0.37%) and Union (down 0.29%) edged lower. (up 0.89%), (up 0.4%) and (up 0.07%) edged lower.

Among private sector banks, RBL Bank (up 0.98%), (up 0.66%), (up 0.37%), Bank (up 0.35%) and (up 0.1%) edged higher. (down 1.67%) and (down 0.31%) edged lower.

Meanwhile, the S&P BSE Sensex was up 69.64 points or 0.26% at 26,385.98. The BSE Bankex index was down 0.5% at 21,080.13, underperforming the Sensex.

The BSE Bankex index had underperformed the market over the past one month till 25 November 2016, declining 7% compared with the Sensex's 6.32% fall. The index had, however, outperformed the market in past one quarter, sliding 4.3% as against the Sensex's 5.46% fall.

The Reserve (RBI) stated on Saturday, 26 November 2016, that with the withdrawal of the legal tender status of Rs 500 and Rs 1,000 denomination bank notes (specified bank notes) beginning 9 November 2016, there has been a surge in deposits relative to the expansion in bank credit, leading to large excess liquidity in the system. The magnitude of surplus liquidity available with the banking system is expected to increase further in the fortnights ahead, the central bank said. In view of this, it has been decided to absorb a part of this surplus liquidity by applying an incremental cash reserve ratio (CRR) as a purely temporary measure, the bank said.

The CRR remains unchanged at 4% of outstanding net demand and time liabilities (NDTL). On the increase in NDTL between 16 September 2016 and 11 November 2016, scheduled banks shall maintain an incremental CRR of 100%, effective the fortnight beginning 26 November 2016. This is intended to absorb a part of the surplus liquidity arising from the return of specified bank notes (SBNs) to the banking system, while leaving adequate liquidity with banks to meet the credit needs of the productive sectors of the economy. As the incremental CRR is intended to be a temporary measure within RBI's liquidity management framework to drain excess liquidity in the system, it shall be reviewed on 9 December 2016 or even earlier, the central bank said. The central bank has separately revived the Guarantee Scheme to enable deposit of SBN balances at the RBI or at currency chests and get immediate value. This measure should also facilitate banks' compliance with the incremental CRR, the central bank said.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Most bank stocks drop as RBI announces measures to drain excess liquidity

Most public sector bank stocks dropped and private sector banks were mixed on the BSE after the central bank announced measures to drain excess liquidity after the government's move to withdraw legal tender status of Rs 500 and Rs 1,000 bank notes

Most public sector bank stocks dropped and private sector banks were mixed on the BSE after the central bank announced measures to drain excess liquidity after the government's move to withdraw legal tender status of Rs 500 and Rs 1,000 bank notes

Among public sector banks, (down 1.97%), State (down 1.72%), (down 1.44%), (down 1.21%), (down 0.88%), (down 0.37%) and Union (down 0.29%) edged lower. (up 0.89%), (up 0.4%) and (up 0.07%) edged lower.

Among private sector banks, RBL Bank (up 0.98%), (up 0.66%), (up 0.37%), Bank (up 0.35%) and (up 0.1%) edged higher. (down 1.67%) and (down 0.31%) edged lower.

Meanwhile, the S&P BSE Sensex was up 69.64 points or 0.26% at 26,385.98. The BSE Bankex index was down 0.5% at 21,080.13, underperforming the Sensex.

The BSE Bankex index had underperformed the market over the past one month till 25 November 2016, declining 7% compared with the Sensex's 6.32% fall. The index had, however, outperformed the market in past one quarter, sliding 4.3% as against the Sensex's 5.46% fall.

The Reserve (RBI) stated on Saturday, 26 November 2016, that with the withdrawal of the legal tender status of Rs 500 and Rs 1,000 denomination bank notes (specified bank notes) beginning 9 November 2016, there has been a surge in deposits relative to the expansion in bank credit, leading to large excess liquidity in the system. The magnitude of surplus liquidity available with the banking system is expected to increase further in the fortnights ahead, the central bank said. In view of this, it has been decided to absorb a part of this surplus liquidity by applying an incremental cash reserve ratio (CRR) as a purely temporary measure, the bank said.

The CRR remains unchanged at 4% of outstanding net demand and time liabilities (NDTL). On the increase in NDTL between 16 September 2016 and 11 November 2016, scheduled banks shall maintain an incremental CRR of 100%, effective the fortnight beginning 26 November 2016. This is intended to absorb a part of the surplus liquidity arising from the return of specified bank notes (SBNs) to the banking system, while leaving adequate liquidity with banks to meet the credit needs of the productive sectors of the economy. As the incremental CRR is intended to be a temporary measure within RBI's liquidity management framework to drain excess liquidity in the system, it shall be reviewed on 9 December 2016 or even earlier, the central bank said. The central bank has separately revived the Guarantee Scheme to enable deposit of SBN balances at the RBI or at currency chests and get immediate value. This measure should also facilitate banks' compliance with the incremental CRR, the central bank said.

Powered by Capital Market - Live News

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Most bank stocks drop as RBI announces measures to drain excess liquidity

Most public sector bank stocks dropped and private sector banks were mixed on the BSE after the central bank announced measures to drain excess liquidity after the government's move to withdraw legal tender status of Rs 500 and Rs 1,000 bank notes

Among public sector banks, (down 1.97%), State (down 1.72%), (down 1.44%), (down 1.21%), (down 0.88%), (down 0.37%) and Union (down 0.29%) edged lower. (up 0.89%), (up 0.4%) and (up 0.07%) edged lower.

Among private sector banks, RBL Bank (up 0.98%), (up 0.66%), (up 0.37%), Bank (up 0.35%) and (up 0.1%) edged higher. (down 1.67%) and (down 0.31%) edged lower.

Meanwhile, the S&P BSE Sensex was up 69.64 points or 0.26% at 26,385.98. The BSE Bankex index was down 0.5% at 21,080.13, underperforming the Sensex.

The BSE Bankex index had underperformed the market over the past one month till 25 November 2016, declining 7% compared with the Sensex's 6.32% fall. The index had, however, outperformed the market in past one quarter, sliding 4.3% as against the Sensex's 5.46% fall.

The Reserve (RBI) stated on Saturday, 26 November 2016, that with the withdrawal of the legal tender status of Rs 500 and Rs 1,000 denomination bank notes (specified bank notes) beginning 9 November 2016, there has been a surge in deposits relative to the expansion in bank credit, leading to large excess liquidity in the system. The magnitude of surplus liquidity available with the banking system is expected to increase further in the fortnights ahead, the central bank said. In view of this, it has been decided to absorb a part of this surplus liquidity by applying an incremental cash reserve ratio (CRR) as a purely temporary measure, the bank said.

The CRR remains unchanged at 4% of outstanding net demand and time liabilities (NDTL). On the increase in NDTL between 16 September 2016 and 11 November 2016, scheduled banks shall maintain an incremental CRR of 100%, effective the fortnight beginning 26 November 2016. This is intended to absorb a part of the surplus liquidity arising from the return of specified bank notes (SBNs) to the banking system, while leaving adequate liquidity with banks to meet the credit needs of the productive sectors of the economy. As the incremental CRR is intended to be a temporary measure within RBI's liquidity management framework to drain excess liquidity in the system, it shall be reviewed on 9 December 2016 or even earlier, the central bank said. The central bank has separately revived the Guarantee Scheme to enable deposit of SBN balances at the RBI or at currency chests and get immediate value. This measure should also facilitate banks' compliance with the incremental CRR, the central bank said.

Powered by Capital Market - Live News

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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