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Markets rise for second day, bank stocks rally on RBI debt loss relief

The Reserve Bank yesterday allowed banks to spread provisions for bond losses in the third and fourth quarters of FY18 over the next four quarters

Press Trust of India  |  New Delhi 

Stock market

stocks today gained up to 5 per cent after the Reserve of India allowed lenders to spread provisions for losses in the third and fourth quarters of FY18 over the next four quarters.

Shares of of India rose by 4.92 per cent, 4.52 per cent, 4.33 per cent, 3.59 per cent, 3.19 per cent, State 2.72 per cent and 2.18 per cent on BSE.

gained 2.13 per cent and 1.49 per cent.

"The RBI has once again provided a breather, especially to the capital-starved PSBs which are under pressure due to colossal NPAs. The move is expected to optically cushion profitability in the near term while providing banks with an opportunity to incrementally provide for stressed assets," said in a report.

The Reserve Bank yesterday allowed banks to spread provisions for losses in the third and fourth quarters of FY18 over the next four quarters.

The central bank said the provisioning for each of these quarters may be spread equally over up to four quarters, commencing with the quarter in which the loss was incurred.

"With a view to addressing the systemic impact of sharp increase in the yields on government securities, it has been decided to grant banks the option to spread provisioning for mark-to-market (MTM) losses on investments held in the available-for-sale (AFS) and in the held-for-trading (HFT) for the quarters ended December 2017 and March 2018," RBI said in a notification yesterday.


The move comes as a big breather for banks which have been fighting record bad loans on top of the massive spike in yields since the past two quarters.

First Published: Tue, April 03 2018. 23:08 IST
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