RBI Policy: Banks stocks in focus

The RBI bi-monthly meet of the MPC is expected to conclude on today (December 7) and its direct impact will be seen on the banking stocks. Banks will be keen to hear the RBI Governor Urjit Patel if he comes up with some changes in the CRR in this meet. The cash reserve ratio (CRR) at the movement is 100 per cent which was increased from four per cent post-demonetisation, which is an additional burden for the banks.

However, on December 6, Bank of Baroda and Bank of India had lowered the lending rates ranging from 5 to 20 basis point. On the other hand, if the RBI cuts interest rates today, banks by default will cut the interest rates. The country’s largest bank SBI will cut interest rates if the RBI removes incremental CRR that constitutes a big chunk of deposits on which the banks are currently not earning any interest.  

The S&P BSE Bankex on December 7 has opened in the green and as on 9.29 a.m. is up by 0.43 per cent. Federal Bank, SBI, PNB, Bank of Baroda, Yes Bank, ICICI Bank, HDFC Bank, Kotak Bank, Axis Bank, IndusInd Bank are all up in the range of 0.01 to 1.37 per cent.