While the BSE bankex ended 231.40 points or 0.78% lower at 29,372 level, bank Nifty fell 187 points to 26,113 points. 

The RBI said that it has extended the timeline for banks to set aside an additional 0.625% as capital conservation buffer by one year to March 31, 2020 to help banks to lend more.

DBS Banking Group says that knee jerk gains in bonds are likely, before returning to familiar drivers particularly in midst of the sharp overnight sell-off in the US markets

The RBI board may have reached on a conclusion over the issues of liquidity and easing out PCA norms.

One of the key points of contention is the govt's alleged demand for transfer of Rs 3.6 lakh crore of RBI's reserves to itself.

PNB Housing Finance was trading 0.89% lower, Indiabulls Housing Finance dipped 2.32%, Dewan Housing Finance rose 2.86%, Mahindra & Mahindra Financial Services fell by 0.74 per cent, Ujjivan Financial Services declined 0.22 per cent and Shriram Transport Finance softened by 0.85% on the BSE.

Under the current structure, RBI's nominees can reportedly take decision on their own, without keeping key stakeholders in the loop. So, the government is expected to ask the RBI to at least seek comments, if not approval, on issues that can impact the overall economy.

Patel is unlikely to yield under pressure and will rather mount a strong defence of the central bank's policies regarding stringent NPA recognition norms as well as measures taken to ease credit supply to MSMEs.

Clearly, the battle lines between the RBI and the government are drawn. The pressure is on the RBI to soften its so called rigid stance to find a way out.

Higher provisioning towards bad loans had impacted the balance sheets of these PSU lenders. As per the financial results posted by them, the biggest loss was posted by scam-hit Punjab National Bank.