Bankex falls 1.48% as RBI tightens norms on consumer loans

Banking company stocks on Friday came under selling pressure at the stock exchanges, a day after the Reserve Bank of India (RBI) increased risk weight on consumer loans from banks and NBFCs by 25 percentage points to curb a build up in the unsecured loans books.

Banking company stocks on Friday came under selling pressure at the stock exchanges, a day after the Reserve Bank of India (RBI) increased risk weight on consumer loans from banks and NBFCs by 25 percentage points to curb a build-up in unsecured loan books.

Reacting to the RBI circular which will now make it mandatory for regulated entities to set aside higher capital for unsecured loans, the Bankex of the BSE fell 740.92 points or 1.48% to 49,170.81.

State Bank of India led the fall with a drop of 3.64%, followed by Axis Bank and Canara Bank which fell 3.03% and 2.02% respectively. ICICI Bank was down 1.45%, Federal Bank down 1.40%, Bank of Baroda down 0.91%, Kotak Bank down 0.43%, HDFC Bank down 0.22% and IndusInd Bank fell 0.09%.

Similarly, the Nifty Bank index of the National Stock Exchange fell 577.60 points, or 1.31%, to 43,583.95.

Kunal Shah, Senior Technical & Derivative analyst, LKP Securities said, “Following the RBI’s announcement of tightening provisions for consumer loans, the Bank Nifty opened with a gap down and sustained below the 44,000 mark. The index’s next support is situated at the 43,300-43,250 zone, serving as a crucial line of defense for the bulls.”

“If this level holds, it could pave the way for a potential recovery towards the 44,000 mark. However, a breach of the mentioned support may intensify selling pressure, leading the index further down towards the 42,700 level on the downside,” he added.

During the day the broader S&P BSE Sensex 50 index fell 187.75 points, or 0.28%, while the NSE Nifty 50 index was down 33.40 points or 0.17%.