Analysts see limited impact on banks earnings after RBI move..!
After banning legal tender status of Rs 500 and Rs 1,000 notes since November 8, there has been a huge surge in banks deposits.To reduce that surplus liquidty available with the banking system the Reserve Bank of India, on last Saturday, announced temporary measures by applying an incremental cash Reserve ratio Bank Nifty fell 1.7 percent intraday, to 18187.40, the lowest level since July8 State Bank of India, ICICI Bank, Bank of Baroda and PNB fell 2-5 percent in early trade managed to recover half of losses later on Axis Bank and HDFC Bank turned positive.Hence, banks especially PSU Banks that have rallied in the past two weeks will see some near term correction it feels.
The central bank
expects magnitude of surplus liquidity available with the banking system
is expected to increase further in the fortnights ahead. Banks so far
garnered more than Rs 6 lakh crore in deposits after demonetisation. The
last date to deposit old notes is December 30, 2016.
"The CRR remains unchanged at 4 percent of outstanding net demand and
time liabilities (NDTL). On the increase in NDTL between September 16
and November 11, scheduled banks shall maintain an incremental CRR of
100 percent, effective the fortnight beginning November 26, 2016," the
Reserve Bank of India said in its press release.
It further says this is intended to absorb a part of the surplus liquidity arising from the return of specified bank notes to the banking
system, while leaving adequate liquidity with banks to meet the credit
needs of the productive sectors of the economy. It will review this
measure on December 9, the day of next policy meet.
Brokerage houses expect this surprise move by RBI to suck out more than
Rs 3 lakh crore liquidity from the banking system. They see limited
impact on banks’ earnings.
It believes banks will need to revist their deposit rates aggresively, or raise lending rates to offset the impact which looks less probable given sluggishness in Credit demand....
The central bank
expects magnitude of surplus liquidity available with the banking system
is expected to increase further in the fortnights ahead. Banks so far
garnered more than Rs 6 lakh crore in deposits after demonetisation. The
last date to deposit old notes is December 30, 2016.
"The CRR remains unchanged at 4 percent of outstanding net demand and
time liabilities (NDTL). On the increase in NDTL between September 16
and November 11, scheduled banks shall maintain an incremental CRR of
100 percent, effective the fortnight beginning November 26, 2016," the
Reserve Bank of India said in its press release.
It further says this is intended to absorb a part of the surplus
liquidity arising from the return of specified bank notes to the banking
system, while leaving adequate liquidity with banks to meet the credit
needs of the productive sectors of the economy. It will review this
measure on December 9, the day of next policy meet.
Brokerage houses expect this surprise move by RBI to suck out more than
Rs 3 lakh crore liquidity from the banking system. They see limited
impact on banks’ earnings.
Read more at: http://www.moneycontrol.com/news/business/analysts-see-limited-impactbanks-earnings-after-rbi-move_8027181.html?utm_source=ref_article
Read more at: http://www.moneycontrol.com/news/business/analysts-see-limited-impactbanks-earnings-after-rbi-move_8027181.html?utm_source=ref_article
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