Twelve bank shares fell by 0.17% to 2.02% at 11:06 IST on BSE after the Reserve Bank of India left key interest rates unchanged at the monetary policy review today, 3 June 2014.
Bank of India (down 2.02%), IndusInd Bank (down 1.86%), IDBI Bank (down 1.68%), Canara Bank (down 1.54%), Kotak Mahindra Bank (down 1.36%), Union Bank of India (down 1.28%), Punjab National Bank (down 1.11%), Bank of Baroda (down 0.99%), Yes Bank (down 0.72%), ICICI Bank (down 0.69%), HDFC Bank (down 0.44%) and Federal Bank (down 0.17%), edged lower.
However, State Bank of India (up 0.03%) and Axis Bank (up 0.12%), edged higher.
The S&P BSE Bankex was up 0.57% at 17,610.93. It outperformed the S&P BSE Sensex, which was up 0.32% at 24,765.07.
The S&P BSE Bankex had outperformed the market over the past one month till 2 June 2014, rising 19.20% compared with 10.18% rise in the Sensex. The index had also outperformed the market in past one quarter, rising 42.54% as against Sensex's 16.88% rise.
The Reserve Bank of India (RBI) kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8%. RBI kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL).
RBI reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 23% to 22.5% of their NDTL with effect from the fortnight beginning 14 June 2014.
RBI also reduced the liquidity provided under the export credit refinance (ECR) facility from 50% of eligible export credit outstanding to 32% with immediate effect.
RBI introduced a special term repo facility of 0.25% of NDTL to compensate fully for the reduction in access to liquidity under the ECR with immediate effect and continued to provide liquidity under 7-day and 14-day term repos of up to 0.75% of NDTL of the banking system.
Consequently, the reverse repo rate under the LAF will remain unchanged at 7%, and the marginal standing facility (MSF) rate and the Bank Rate at 9%.
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