Rate Relief Rally: Nifty Bank Scales 57,000 For First Time After RBI's Surprise Move

The Nifty Bank index rallied past the 57,000-mark for the first time ever in trade on June 9, 2025, buoyed by the rate relief rally after the Reserve bank of India's (RBI) Monetary Policy Committee (MPC) decided to go for third rate cut in a row.

The Nifty Bank surged as much as 0.82 per cent, or 471.1 points, to hit an all-time high of 57,049.50. This is the fourth consecutive session of gains for the bank index. In the past month alone, the bank index has climbed over 6 per cent, and it is up 17.6 per cent over the last three months. So far in 2025, the index has gained 11.3 per cent.

At close, the Nifty Bank slipped below the 57,000-mark to close at 56,839.60 level.

Kotak Mahindra Bank Lead Gainers

Leading the gains in the Nifty Bank were Kotak Mahindra Bank, which gained 3.25 per cent; AU Small Finance Bank and Federal Bank, both of which gained between 2.5 per cent to 3 per cent; and Axis Bank, which advanced 2.17 per cent.

Canara Bank, Punjab National Bank, IndusInd Bank, State Bank of India, IDFC First Bank, and Bank of Baroda too gained between 0.5 per cent and 2 per cent.

Heavyweights HDFC Bank and ICICI Bank, however, traded under pressure after negative developments, capping gains of the index.

HDFC Bank Share Price Ends Flat Amid Fraud Allegations On MD & CEO

HDFC Bank ended flat with a slight positive bias after trading in the positive territory throughout the session following the allegations of fraud against its Managing Director and CEO, Sashidhar Jagdishan. The bank, in an exchange filing on June 8, confirmed that an FIR has been lodged against Jagdishan over his alleged involvement in a series of financial frauds. However, the bank denied the allegations.

The private lender, instead, has accused the Mehta family, owners of Splendour Gems Limited (formerly Beautiful Diamonds Ltd), of misusing legal proceedings to delay repayment of a Rs 65.22 crore loan, which the bank said is pending since 1995. Further, the bank has alleged that despite the Debt Recovery Tribunal issuing a recovery certificate in 2004 and various enforcement steps since then, the dues are still unpaid.

In response to recovery efforts, members of the Mehta family have filed multiple legal cases and complaints against the bank and its top executives, including the MD & CEO, said the bank.

"HDFC Bank firmly believes that these allegations are retaliatory in nature and have mala fide intention solely at evading repayment of long-standing dues," the lender said.

ICICI Bank Share Price Falls After Rs 4.6 Crore Scam

ICICI Bank shares fell 1.7 per cent after reports surfaced that a relationship manager at the bank's Kota, Rajasthan branch allegedly siphoned off Rs 4.58 crore from 110 accounts of 41 customers over a three-year period between 2020 and 2023.  The bank's employee, 26-year-old Sakshi Gupta, used the stolen money for speculative trading in stock market future and options (F&O). Gupta was arrested by the police on June 8.

According to police, she used to conceal her crime by replacing registered mobile numbers with those of her relatives to prevent account holders from receiving transaction alerts and one-time passwords (OTPs).

How A Reduction In Repo Rate, CRR Affects Banking Stocks

Repo rate: The RBI Governor Sanjay Malhotra on June 6 announced the six-member MPC's decision to cut the repo rate by an aggressive 50 basis points (bps) as against the 25 bps cut the market was already expecting.

A cut in repo rate, the rate at which RBI lends money to banks, helps banks to borrow money from the RBI at a lower cost. This leads banks to lower their interest rates on home loans, auto loans, education loans or personal loans. This ultimately encourages consumers to take more loans from banks and increase their spending on big-ticket items, thereby boosting growth in the economy.

CRR: The MPC also went for a 100-bps cut in Cash reserve Ratio (CRR) of banks, bringing it down to 3 per cent of net demand and time liabilities (NDTL). This is estimated to boost primary liquidity into the banking system, to the tune of Rs 2.5 lakh crore.

CRR is the percentage of a bank's total deposits that it is mandatorily required to keep with the RBI in cash.

A cut in CRR means banks don't have to keep as much money with the RBI. This gives them more cash to lend to customers or invest elsewhere. Money kept as CRR with the RBI doesn't earn interest. So, when CRR is reduced, banks can use that money to generate returns.

Lowering the CRR also increases liquidity in the system, which helps banks manage their day-to-day operations more easily and provide credit to businesses and consumers who need it.