Canara Bank, PNB, IDFC First Bank Shares Surge, Pushing Nifty Bank To Record High

Shares of major banks rallied on Tuesday, April 22, pushing the Bank Nifty index to a fresh record high after the Reserve Bank of India (RBI) issued final guidelines on liquidity coverage that were more relaxed than expected.

The Bank Nifty rose over 1 per cent, extending its winning streak to six sessions at 55,957.45. Canara Bank was leading the charge with gains of 2.83 per cent,  followed by Bank of Baroda at 2.26 per cent, Kotak Mahindra Bank at 1.40 per cent, and HDFC Bank up 1.86 per cent. State Bank of India (SBI) was also in green, up 1.47 per cent, Punjab National Bank (PNB) up 2.02 per cent, and IDFC First Bank up by 2.10 per cent on NSE, at the time of writing this report.

The Bank Nifty, comprising major private as well as PSB, earlier touched a record high of 54,467 on September 26, 2024. 

Bank Nifty was trading in the green, up 0.88 per cent at 55,793.35, on April 22, at 1:30 pm.

Investor sentiment turned positive after the RBI softened its stance in the final version of its Liquidity Coverage Ratio (LCR) norms, offering relief to banks concerned about maintaining large buffers of liquid assets.

One key change was a lower runoff requirement for deposits raised through digital channels. The RBI reduced the additional runoff rate to 2.5 per cent from the 5 per cent proposed in the draft. Stable retail and small business deposits accessed via internet or mobile banking will carry a 7.5 per cent runoff factor, while less stable ones will be tagged at 12.5 per cent, up from current norms of 5 per cent and 10 per cent, respectively.

In another shift, wholesale deposits from legal entities such as trusts, educational institutions, and partnerships will be assigned a 40 per cent runoff rate, sharply lower than the 100 per cent proposed earlier — a significant concession that was absent from the draft version.

Government securities (G-secs) held as Level 1 High-Quality Liquid Assets (HQLA) will now be valued at market prices, adjusted for standard haircuts.