Banking stocks remain in focus as Finance Minister Arun Jaitley said at an award function, that soon he will be announcing a policy for quick settlement of non-performing assets at banks in a couple of days. The decision will be taken in discussion with Reserve Bank of India.
Soon there will be clarity on the new concept of "Bad Banks" to make Indian banking sector more reliable and strengthening the system.
Post Demonetization, banks have been left with excess liquidity, where banks have deposits standing at 105 lakh core as per RBI Data, a growth of around 13% from last year. Before Demonetisation the growth was below 10%. Finance Minister Arun Jaitley said, he will be calling a meeting with bankers to address "the absorption of surplus liquidity from the system, but without the need for providing collateral in exchange". However if RBI agrees to take out excess funds, below its reverse repo rate of 6.25%, then they may encourage banks to lower down their lending rates. This meeting is expected to be schedule tomorrow by the heads of select large banks and chaired by economic affairs secretary Shaktikanta Das. Mean while, First Bi-monthly Monetary Policy Statement for 2017-18 is scheduled on 6th April 2017 and that is expected to have huge impact on banking stocks.
Bank Nifty has rallied almost 21% from its low of 17606, made on 23rd Dec 2016, post demonetization and is currently trading at 21105. It made a record high of 21336 on 17th March 2017. Banking stocks have also rallied all the way from 23rd Dec 2016’s low.
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