RBI's new rules on NPAs to weigh on bank stocks; PSBs to face bigger impact

Though framework is positive for banking sector in long-term, it will take a toll on its profits in near-term as provisioning will increase

The new non-performing asset (NPA) resolution framework announced by the Reserve Bank of India (RBI) on Monday is expected to weigh on stocks of banking companies in Wednesday’s trade. Shares of public sector banks (PSBs) and private sector lenders such as Axis Bank and ICICI Bank are likely to feel the heat in Wednesday’s trade, analysts say.

Experts, however, say that the PSBs will face a bigger impact as they have a large number of loans in various stressed brackets such as S4A, SDR, 5:25, and others, which are currently not classified as NPAs.