The country's share market has been down since Monday morning. The country's banking sector has crashed since morning today. Share prices of multiple front-line public sector and private banks have declined. Has this happened to banking stocks due to the Reserve Bank's recent directive to prevent the rupee's fall?
Among the various sectoral indices of the share market, the banking sector has witnessed the highest decline. At 12:45 PM, Nifty PSU Bank was down 3.05 percent, Nifty Bank was down 2.58 percent, and Nifty Private Bank was down 2.23 percent. Along with this, share prices of multiple front-line banks have also declined.
Also Read | Seat selection fees to drop? New DGCA rule may change how you book flights starting April 20
IndusInd Bank's share price declined by 3.98 percent. Union Bank of India's share price declined by 4.09 percent. Axis Bank's share price declined by 3.40 percent. Bank of Baroda's share price declined by 3.68 percent. State Bank's share price declined by 2.92 percent. Punjab National Bank's share price declined by 3.19 percent.
IDFC First Bank's share price declined by 3.31 percent. HDFC Bank's share price declined by 1.61 percent. ICICI Bank's share price declined by 1.23 percent. Federal Bank's share price declined by 2.58 percent. Yes, Bank's share price declined by 4.24 percent.
RBI caps forex exposure, raising concerns over banks’ treasury profits
The Reserve Bank of India (RBI) has issued a directive to all banks in the country to prevent the rupee's fall. The central bank's new guideline states that each bank must limit their 'Net Open Rupee Position' in the foreign exchange market to a maximum of $100 million at the end of each business day. All banks have been given a deadline to implement this rule by April 10.
Recently, the country's banks were earning substantial profits through dollar arbitrage. But due to this strict measure, those profit margins will be hit. Experts from brokerage firm Systematix have said, "This obligation to sell dollars and buy rupees has created the possibility of losses for banks.
Also Read | Fewer flights, higher fares? Summer aviation schedule shrinks by 3,000
However, the Reserve Bank has not specifically disclosed any bank's open position or transaction details. Therefore, it is difficult to clearly state at this moment exactly how much financial impact will fall on which bank. However, since large banks like State Bank of India (SBI), HDFC Bank, ICICI Bank, and Axis Bank have the biggest treasury and forex (FX) desks, it is believed that the impact of this new rule may fall more on them."
{News Ei Samay does not provide investment advice anywhere. Investment and trading in the share market or any field involve risk. Proper study and expert advice are recommended beforehand. This news is published for educational and awareness purposes.}
