Banking stocks climbed up to 7 per cent in trade on Thursday after the Reserve Bank of India shortened the list of companies whose loans need to be provided for against the risk of default.
According to report, the immediate outcome of the latest decision will be better-than-anticipated results at banks in the quarter just ended, especially state-owned ones that have heavy exposure to highly indebted corporate houses.
"On Wednesday, RBI issued a letter," said a banker who did not want to be identified. "Some of the companies are removed from the list and no new names have been added as yet."
At 10.30 AM, PNB was trading 6.82 per cent higher at Rs 90. ICICI Bank jumped 6.21 per cent to Rs 252.95. Bank of Baroda, SBI, Federal Bank and Axis Bank soared 5.65 per cent, 4.30 per cent, 2.61 per cent and 2.33 per cent, respectively. Yes Bank, IndusInd Bank and HDFC Bank gained up to 1.3 per cent.
In a late evening communication, RBI told banks individually that they don't have to provide in the March quarter for outstanding loans to 20 firms, including Jaiprakash Associates and Coastal Energen, out of the 150 it had listed in December. The decision was prompted partly by the steps taken by companies to cut debt.