Fourteen bank stocks lost 0.57% to 4.63% at 11:12 IST on BSE after Fitch Ratings said that the progressive increase in minimum capital requirements under Basel III is likely to put nearly half of Indian banks in danger of breaching capital triggers.
Among public sector banks, Bank of Baroda (down 4.3% at Rs 164.50), Indian Bank (down 3.64% at Rs 220.95), Union Bank of India (down 3.62% at Rs 143.90), Bank of India (down 3.28% at Rs 119.35), State Bank of India (down 3.03% at Rs 256), Punjab National Bank (down 2.76% at Rs 140.90), Canara Bank (down 2.43% at Rs 303.65) and IDBI Bank (down 1.63% at Rs 78.25) declined.
Among private sector banks, Yes Bank (down 4.63% at Rs 1,218.05), Axis Bank (down 3.64% at Rs 590.85), ICICI Bank (down 2.41% at Rs 267.55), IndusInd Bank (down 2.18% at Rs 1,187.55), HDFC Bank (down 1.2% at Rs 1,275) and Kotak Mahindra Bank (down 0.57% at Rs 813.95) edged lower.
The S&P BSE Bankex index was currently down 2.31%. It underperformed the S&P BSE Sensex which was down 425.33 points or 1.48% at 28,371.92.
The S&P BSE Bankex index had outperformed the market over the past one month till 9 September 2016, gaining 7.37% compared with Sensex's 2.54% gain. The index had also outperformed the market in past one quarter, advancing 13.4% as against Sensex's 7.6% gain.
Fitch Ratings has said in a report dated 11 September 2016 that the progressive increase in minimum capital requirements under Basel III is likely to put nearly half of Indian banks in danger of breaching capital triggers. State-run banks are the most at risk, given their poor existing capital buffers and weak prospects for raising capital through market channels, Fitch said. Fitch estimates that Indian banks will require around $90 billion in new capital by FY 2019 to meet Basel III standards, with the state banks accounting for about 80% of the total. According to Fitch, state-run banks will continue to face difficulties in raising capital from the market, which will keep their Viability Ratings under pressure and will weigh on the sector outlook.
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