Banking stocks decline as RBI introduces incremental CRR

SBI, BOB, BOI, Oriental Bank, PNB and Union Bank of India were down more than 2% each on the NSE.

Banking shares have slipped by up to 4% in intra-day trade after the Reserve Bank of India (RBI) introduced an incremental Cash Reserve Ratio (CRR) of 100% for the fortnight beginning Saturday.

State Bank of India (SBI), Bank of Baroda, Bank of India, Oriental Bank of Commerce, Punjab National Bank and Union Bank of India from state-owned banks were down more than 2% each, while Federal Bank, ICICI Bank, Axis Bank and YES Bank from the private sector were down between 1% and 2% on the National Stock Exchange (NSE).

At 09:39 am; Nifty PSU Bank index was down 2.6%, as compared to 1.45 declined in Nifty Bank index and 0.19% fall in the benchmark Nifty50. CRR is the portion of the deposits which banks are required to park to the RBI. Currently it is at 4%.

“On the increase in NDTL (net demand and time liabilities) between September 16, 2016 and November 11, 2016, scheduled banks shall maintain an incremental CRR of 100%, effective the fortnight beginning November 26, 2016,” RBI said in a press release.

This is intended to absorb a part of the surplus liquidity arising from the return of 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 the Reserve Bank’s liquidity management framework to drain excess liquidity in the system, it shall be reviewed on December 9, 2016 or even earlier, it added.

The CRR remains unchanged at 4% of outstanding net demand and time liabilities (NDTL), RBI said. CLICK HERE TO READ FULL REPORT.

COMPANY	LATEST	PREV CLOSE	LOSS(%)
BANK OF BARODA	162.00	167.90	-3.5
LAK. VILAS BANK	143.50	148.30	-3.2
BANK OF INDIA	117.75	121.40	-3.0
ORIENTAL BANK	116.45	120.00	-3.0
S B T	545.55	562.10	-2.9
ST BK OF BIKANER	693.70	714.65	-2.9
ST BK OF INDIA	253.85	260.95	-2.7
ST BK OF MYSORE	546.50	561.00	-2.6
PUNJAB NATL.BANK	136.70	140.30	-2.6
CORPORATION BANK	44.50	45.65	-2.5
FEDERAL BANK	69.00	70.65	-2.3
ICICI BANK	254.70	260.10	-2.1
UNION BANK (I)	150.00	153.05	-2.0
VIJAYA BANK	44.50	45.35	-1.9
CANARA BANK	304.75	310.50	-1.9
YES BANK	1146.45	1167.70	-1.8
INDIAN BANK	237.70	242.10	-1.8
PUN. & SIND BANK	49.00	49.90	-1.8
RBL BANK	344.80	351.10	-1.8
CITY UNION BANK	135.00	137.45	-1.8