Shares of ten banks fell by 1.39% to 5.33% at 15:20 IST on BSE, reacting negatively to the Reserve Bank of India Governor Raghuram Rajan's comments.
Among private sector banks, Yes Bank (down 4.17%), ICICI Bank (down 3.9%), Federal Bank (down 1.98%), Axis Bank (down 1.85%), IndusInd Bank (down 1.63%), HDFC Bank (down 1.59%) and Kotak Mahindra Bank (down 1.39%), edged lower.
Among PSU banks, Punjab National Bank (down 5.33%), Bank of Baroda (down 3.17%) and State Bank of India (down 2.13%), edged lower.
The BSE Bankex was down 2.25% at 18,649.65. It underperformed the BSE Sensex, which was down 0.89% at 25,027.02.
The Reserve Bank of India (RBI) Governor, Raghuram Rajan, said today, 11 December 2015, that RBI was monitoring how Indian banks were using the provisions - including that of strategic debt restructuring (SDR) - given to them to tackle the issue of bad loans.
Banks are facing criticism over their use of SDR, which helps banks swap unpaid debt for majority control in troubled companies. Investors are worried that accounts under SDR may attract early provisioning, reports added.
Meanwhile, RBI yesterday, 10 December 2015, announced a reduction of 100 basis points in the Statutory Liquidity Ratio (SLR) of commercial banks to 20.5% from 21.5% in four equal stages starting from 2 April 2016. The SLR will be reduced to 21.25% from 2 April 2016, 21% from 9 July 2016, 20.75% from 1 October 2016 and 20.5% from 7 January 2017.
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