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Bank stocks feel the heat after CRR hike, down up to 3%

Press Trust of India  |  New Delhi 

stocks came under pressure today, falling up to 3 per cent, as RBI unexpectedly increased CRR to 100 per cent on incremental

of of Baroda slipped 2.92 per cent, lost 2.82 per cent, PNB 2.25 per cent and 1.73 per cent on

Besides, dropped 2.72 per cent, 2.13 per cent and 1.59 per cent.

The 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 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, Financial Services Ltd.

The Reserve Bank on Saturday asked lenders to temporarily maintain an incremental reserve ratio (CRR) of 100 per cent to absorb excess liquidity from the system. CRR is the portion of the which banks are required to park with RBI. The actual current rate of CRR is 4 per cent.

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

First Published: Mon, November 28 2016. 19:13 IST