Hike In Stock Lending Limits Expected

They have also asked the RBI to increase the limit for investment in stocks and shares.

At present, the banks have been allowed to invest five per cent of the previous years deposits in stocks and shares and another 5 per cent in bonds and debentures.

Sources in the financial sector are bullish about the increase in the investment limits. In order to be able to successfully disinvest PSU shares, in the current stock market conditions the investment limits of banks will have to be hiked, said a banker.

It is also felt that RBI might allow banks to trade in secondary stock market. Investments in equity is a major business of overseas banks. However, it is felt that the RBI will allow only the strongly capitalised, profit-making banks to trade in the secondary market initially.