Bank stocks came under pressure today, falling up to 3 per cent, as RBI unexpectedly increased CRR to 100 per cent on incremental deposits. Shares of Bank of Baroda slipped 2.92 per cent, SBI lost 2.82 per cent, PNB 2.25 per cent and ICICI Bank 1.73 per cent on BSE. Besides, Bank of India dropped 2.72 per cent, State Bank of Mysore 2.13 per cent and Yes Bank 1.59 per cent. The BSE bank index went down 1.16 per cent to end at 20,939.67. "Market traded lower in the early hours of trade as RBI's unexpected move to increase the CRR to 100 per cent on incremental deposits brought banks under pressure. RBI's move is negative for the banks as the additional interest cost will impact the banks' profitability in the medium term...," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services Ltd. The Reserve Bank on Saturday asked lenders to temporarily maintain an incremental cash reserve ratio (CRR) of 100 per cent to absorb excess liquidity from the system.
CRR is the portion of the deposits which banks are required to park with RBI. The actual current rate of CRR is 4 per cent.
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