While keeping the policy rates and stance unchanged, the central bank announced measures to offer loan relief to realty, auto and micro, small and medium enterprises.
Banking stocks, including IndusInd Bank, RBL Bank, State Bank of India and Yes Bank, jumped up to 5 percent in intraday trade on February 6 after the monetary policy outcome of the Reserve Bank of India (RBI).
While keeping the policy rates and stance unchanged, the central bank announced a raft of measures to offer loan relief to realty, auto, micro, small and medium enterprises (MSMEs).
The central bank said it actively engaged in revitalising the flow of bank credit to productive sectors having multiplier effects to support impulses of growth.
Scheduled commercial banks would be allowed to deduct the equivalent of incremental credit disbursed by them as retail loans for automobiles, residential housing and loans to MSMEs, over and above the outstanding level of credit to these segments as at the end of the fortnight ended January 31, 2020, from their net demand and time liabilities for maintenance of the cash reserve ratio (CRR).
"This shall reduce the funding cost of the banks and will provide added incentive to lend more," said Anusha Raheja, BFSI Research Analyst at LKP Securities.
"Extension of date of commencement of commercial operations of project loans for commercial real estate (delayed for the reasons beyond the control of the promoters) by another one year without downgrading asset classification is sizeably positive for all the banks, NBFCs, HFCs with higher exposure to commercial real estate projects."
The Nifty Bank index was up 1 percent at around 1440 pm. Ten of the 12 stocks in the index were trading higher.
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