Banking stocks crashed today after RBI extended moratorium on payment of all term loans by another three months to help borrowers. Loan moratorium has now been extended till August 31 for 6 months. Extension of moratorium will put pressure on the books of banks and may lead to a series of bad loans for the lenders. BSE bankex ended 2.44% or 497 points lower at 19,909. The index sinked 731 points intra day to 19,675 compared to the previous close of 20,406.
The index was the biggest loser among BSE sectoral indices. Similarly, bank Nifty plunged 456 points or 2.57% to 17,278. The index slipped 630 points to 17,105 intra day against previous close of 17,735. The banking indices hit their intra day lows soon after the announcement of extension of moratorium by RBI governor Shaktikanta Das.
Axis Bank, ICICI Bank, IndusInd Bank and HDFC Bank were top sector losers on Sensex. On Nifty, Axis Bank, ICICI Bank and HDFC Bank were top banking losers. On BSE bankex, all eight components except Kotak Bank closed in the red. SBI which ended 0.72% lower at Rs 150.85 fell to a fresh 52 week low of Rs 149.55. Kotak Mahindra Bank managed to close 0.91% higher at Rs 1,160.25 on BSE.
In his third address during the ongoing lockdown, Das announced extension of moratorium of loans till August. In March, the central bank had allowed a three-month moratorium on payment of all term loans due between March 1 and May 31. SBI Research had recently said that with the government extending the nationwide lockdown up to May 31, the RBI may extend the moratorium on repayment of loans for three more months.
The first address by Shaktikanta Das amid the lockdown was on March 27 and the second was on April 17. The central bank has infused funds totalling 3.2 per cent of GDP into the economy since the February 2020 monetary policy meeting.
"It was indeed a good policy by RBI. Extension of moratorium and converting the interest into term loans which essentially increases the payback cycle , swap facility for exim banks , extension of import payments and increasing the exporters length of credit to 15 months from one year are steps in the right direction and eases the liquidity situation with export and import companies. " Abhishek Goenka, Founder & CEO, IFA Global, said.
By Aseem Thapliyal