Bank stocks gain after Govt cuts interest rates on various small savings schemes

Bank stocks edged higher at 9:51 IST on BSE after the government cut interest rates on various small savings schemes for Q1 June 2016 based on the prevailing G-Sec yields.

Meanwhile, the S&P BSE Sensex was up 96.07 points or 0.39% at 25,048.81.

Among public sector banks, IDBI Bank (up 4.69% at Rs 70.30), Punjab National Bank (up 2.25% at Rs 86.25), Indian Bank (up 1.56% at Rs 104.05), State Bank of India (up 1.44% at Rs 193.80), Bank of India (up 1.81% at Rs 98.35), Canara Bank (up 0.97% at Rs 191.95) and Corporation Bank (up 1.41% at Rs 39.55) edged higher.

Among private sector banks, Axis Bank (up 1.1% at Rs 440.75), ICICI Bank (up 0.98% at Rs 232.60), HDFC Bank (up 0.67% at Rs 1,035.50) and Yes Bank (up 0.22% at Rs 816) edged higher. Kotak Mahindra Bank (down 0.2% at Rs 656.45) and IndusInd Bank (down 0.19% at Rs 925.45) edged lower.

The interest rate on Public Provident Fund (PPF) was slashed to 8.1% from 8.7%. The interest rate on Sukanya Samriddhi Account Scheme was slashed to 8.6% from 9.2%. The interest rate on 5 Year Senior Citizens Savings Scheme was cut to 8.6% from 9.3%. The government had recently announced that it would revise interest rates on small saving schemes on quarterly basis against the earlier practice of annual revision. The quarterly revision of interest rates will ensure that interest rates under small savings schemes are more dynamically related to the current market rates, thereby enabling commercial banks to move their interest rates in line with current money market rates, the finance ministry said in a statement. The additional interest rate spreads ranging from 25 basis points to 100 basis points over the G-Sec yields which the Government allows on PPF, Senior Citizen Savings Scheme, Sukanya Samridhi Scheme, National Savings Certificate, five year time deposit and Monthly Income Scheme have been continued.

Bank of Baroda (BoB) rose 1.32% at Rs 145.95. BoB said on Saturday, 19 March 2016, that credit rating agency Brickwork Ratings India has cut the outlook on its ratings on the bank's upper Tier II bonds of Rs 1000 crore issued in two tranches of Rs 500 crore each to negative from stable.

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