3 private banks, 2 foreign peers hit by mkt crash

Three major private sector banks and two foreign banks are learnt to have been badly hit by the plunge in the stock markets due to their exposure to margin funding.

A conservative estimate puts the losses of these banks at Rs 2,000-3,000 crore.

While they charge 50-60 per cent margin for loans against shares, with the equity market crashing continuously over the last few trading sessions, most of these banks hit the margin limit.

On last Friday and today, these banks were left with no choice but to liquidate shares pledged against loans as their values nose-dived. But this was not enough to make up for the loss in lending.

Some of the affected banks had earlier sought RBI permission to relax the prudential norms relating to banks' equity market exposure. Sources said brokers to whom these banks have lent are also likely to face a payment crisis.