Banks stocks react sharply to new RBI rules on NPA

Yes Bank, SBI and Axis Bank were the biggest loser on Wednesday. The stock of Yes Bank, SBI and Axis Bank was down around 4 per cent. 

The PSU and private bank stocks were reacting to the new rules on NPA resolution announced by RBI on Monday. The central bank has now set a strict deadline of 180-day for banks to finalise a resolution plan in case of a default. The new rules will subsume existing stressed asset schemes including Strategic Debt Restructuring Scheme (SDR) and the Scheme for Sustainable Structuring of Stressed Assets (S4A) and gives importance to the Insolvency and Bankruptcy Code. 

The new regulations which aim at better recovery of NPAs also call for higher provisioning for bad loans.

On Wednesday, Nifty Bank closed at 25,341.25, down 1.40 per cent, while Nifty PSU Bank closed at 3,307.05, down 4.78 per cent. The benchmark Nifty closed at 10,500, down 0.37 per cent.