Banking scrips crumble
Bank shares were under pressure for the second straight day although latest data showed inflation rate slowed to 6.63% in the 12 months to 10 February.This inflation rate was lower than previous week's annual increase of 6.73%.
ICICI Bank was down 4.5% to Rs 905, HDFC Bank was down 3% to Rs 958, State Bank of India was down 2.2% to Rs 1055 and UTI Bank was down 5.9% to Rs 488.05.
On Thursday (22 February), SBI lost 2.4% to Rs 1079.70, ICICI Bank lost 2.3% to Rs 948.50 and HDFC Bank had lost 2.5% to Rs 988.55. The Bankex had declined 177.81 points (2.4%), to 6,998.97, on that day.
Banks had recovered from the lower level after in the last few days, as a number of them raised their prime lending rates (PLRs), in response to a hike in their cash reserve ratio (CRR) requirement by 50 basis points. From 6,976.88 on 14 February 2007, the Bankex had surged to 7,289.10 on 19 February 2007. From a high, it had slipped again to 7,176.78 by 21 February 2007.
Bank shares had tumbled ahead of the CRR hike. From a recent high of 7,594.83 on 8 February 2007, the Bankex had lost 328.09 points (4.3%), to 7,266.74 by 13 February 2007.
Leading state-run banks State Bank of India, Bank of India, Bank of Baroda and Punjab National Bank have raised their PLRs by a steep 50 basis points each over the past few days. The hike in lending rates will help banks protect their margins in the current rising interest rate scenario. Strong credit growth, in a booming Indian economy, has pushed up both lending and deposit rates of banks in the past few years.
A higher CRR requirement will deprive banks of lendable resources to that extent. The CRR hike will suck out Rs 14000 crore from the banking system. Banks do not earn any interest on CRR funds kept with the Reserve Bank of India (RBI).
Bank credit has been growing at a robust pace but recently slowed in some segments like home loans. Non-food credit grew 30.2% year-on-year up to 2 February 2007, against a growth of 33.2% a year ago, while aggregate deposits expanded 23.2% year-on-year to 2 February, over and above 17.5% a year ago.
ICICI Bank was down 4.5% to Rs 905, HDFC Bank was down 3% to Rs 958, State Bank of India was down 2.2% to Rs 1055 and UTI Bank was down 5.9% to Rs 488.05.
On Thursday (22 February), SBI lost 2.4% to Rs 1079.70, ICICI Bank lost 2.3% to Rs 948.50 and HDFC Bank had lost 2.5% to Rs 988.55. The Bankex had declined 177.81 points (2.4%), to 6,998.97, on that day.
Banks had recovered from the lower level after in the last few days, as a number of them raised their prime lending rates (PLRs), in response to a hike in their cash reserve ratio (CRR) requirement by 50 basis points. From 6,976.88 on 14 February 2007, the Bankex had surged to 7,289.10 on 19 February 2007. From a high, it had slipped again to 7,176.78 by 21 February 2007.
Bank shares had tumbled ahead of the CRR hike. From a recent high of 7,594.83 on 8 February 2007, the Bankex had lost 328.09 points (4.3%), to 7,266.74 by 13 February 2007.
Leading state-run banks State Bank of India, Bank of India, Bank of Baroda and Punjab National Bank have raised their PLRs by a steep 50 basis points each over the past few days. The hike in lending rates will help banks protect their margins in the current rising interest rate scenario. Strong credit growth, in a booming Indian economy, has pushed up both lending and deposit rates of banks in the past few years.
A higher CRR requirement will deprive banks of lendable resources to that extent. The CRR hike will suck out Rs 14000 crore from the banking system. Banks do not earn any interest on CRR funds kept with the Reserve Bank of India (RBI).
Bank credit has been growing at a robust pace but recently slowed in some segments like home loans. Non-food credit grew 30.2% year-on-year up to 2 February 2007, against a growth of 33.2% a year ago, while aggregate deposits expanded 23.2% year-on-year to 2 February, over and above 17.5% a year ago.
posted by SY at 6:27 PM
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