Banking stocks led the rally today after Reserve Bank of India (RBI) eased norms for NPA classification and announced more liquidity measures to support NBFCs, HFCs, and MFIs.
Bank Nifty closed 6.61% or 1,281 points higher at 20,681. Similarly, BSE bankex gained 1,515 points or 6.83% to end at 23,684.
All nine components on BSE bankex closed in the green.
Axis Bank (13.45%), ICICI Bank (9.89%) , IndusInd Bank (9.13%) , Federal Bank (9.02%) and Kotak Mahindra Bank (4.96%) were top gainers on the index. Country's largest lender SBI closed 2.49% higher at Rs 193.30.
On Bank Nifty, Axis Bank 13.31%), Bandhan Bank (9.13%) , Bank of Baroda (1.21%) and Federal Bank (9%) were the top gainers. All 12 Bank Nifty components closed in the green.
The Reserve Bank of India (RBI) has decided to provide a relief to the standard bank accounts availing a loan moratorium between March 1 and May 31. Now, the 90-day non-performing asset (NPA) norm would exclude the moratorium period for such accounts, RBI Governor Shaktikanta Das said.
RBI would provide a standstill on asset classification for standard bank accounts, implying these couldn't be classified as bad assets after stipulated 90-day period. However, the banks will have to maintain an additional provisioning of 10 per cent on such accounts, Das said.
On March 27, RBI announced a three-month moratorium on term loans whose installments were due between March 1 and May 31. According to the RBI's latest announcement, the bad loan classification period now changes from 90 days to 180 days for all such accounts.
To boost the housing finance sector, RBI announced a refinancing facility worth Rs 50,000 crore. NABARD (Rs 25,000 crore), SIDBI (Rs 15,000 crore) and NHB (Rs 10,000 crore) would be the beneficiaries. They will be charged at the repo rate of 4.4 per cent for this amount. The companies had earlier asked the government to help them with liquidity as they were suffering on account of tight liquidity conditions.
By Aseem Thapliyal