RBI draft knocks over bank stocks

Bank stocks fell like nine pins on Monday, in reaction to the Reserve Bank of India's (RBI) proposal to cap all voting rights at 10 per cent. Among indices, the Bombay Stock Exchange (BSE) Bankex was the biggest loser today, falling 3 per cent even as the Sensex fell 0.55 per cent.

Non-Sensex private banking stocks took the maximum hit. The Global Trust Bank scrip was down 12.90 per cent to Rs 11.88, the IndusInd Bank scrip fell 7.26 per cent to Rs 46.60, the Karnataka Bank scrip fell 6.95 per cent to Rs 81.70 and the Bank of Rajasthan counter lost 6.74 per cent to Rs 33.20.

The ING Vysya Bank scrip was down 5.19 per cent to Rs 377.35, the Karur Vysya Bank share price fell 5.18 per cent to Rs 308.10 and the UTI Bank scrip's price was down 2.54 per cent to Rs 126.70.

The ICICI Bank scrip was the biggest loser in the Sensex basket, falling 3.86 per cent to close at Rs 235.50, followed by the State Bank of India scrip, which tumbled 3.22 per cent to Rs 430.85. The HDFC Bank scrip fell 0.90 per cent to close at Rs 361.65.

However, the Kotak Mahindra Bank scrip gained 1.72 per cent to close at Rs 357.30 on the NSE, as against Friday's close of Rs 351.25.

Brokers said banking stocks crashed following the release of the RBI's draft policy on the ownership and governance of private banks on Friday. The draft said that no private and foreign banks operating in India would be allowed to hold more than a 5 per cent stake in another private bank.

The draft added that in case of foreign direct investment in private banks, the stake of one single entity or a group of related entities should be capped at 10 per cent.

The same limit is applicable to individual foreign institutional investors (FIIs), which will not be allowed to hold more than 10 per cent each within the overall FII limit of 49 per cent.