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Business Upturn
22-04-2025
- Business
- Business Upturn
Canara Bank shares rise nearly 3% as RBI eases final LCR norms; stock nears 52-week high
By Aditya Bhagchandani Published on April 22, 2025, 10:47 IST Shares of Canara Bank rose nearly 3% in early trade on Monday, April 22, hitting ₹101.65, up ₹2.65 or 2.68% from its previous close of ₹99.00. The stock is inching closer to its 52-week high of ₹128.90 amid supportive regulatory developments from the Reserve Bank of India (RBI). The rally comes after the RBI released the final rules on the Liquidity Coverage Ratio (LCR) framework, which were perceived as less stringent than the July 2024 draft. The central bank has halved the additional run-off rate for retail and small business IMB-enabled deposits from 5% (proposed) to 2.5%, providing significant relief to banks. Stable retail deposits enabled via internet and mobile banking will now attract a 7.5% run-off factor, while less stable ones will face a 12.5% rate — up from the current 5% and 10%, but much lower than the earlier proposed 10% and 15%. ICRA noted that the modified norms could free up ₹2.7-3.0 lakh crore in HQLAs, providing additional credit growth potential of 1.4-1.5% for the banking system. The RBI also postponed the implementation of the revised norms to April 2026, allowing banks more time to adjust. With a market cap of ₹921.58 billion and a P/E ratio of 5.61, Canara Bank is one of the most active PSU bank stocks today, benefiting from improved investor sentiment. Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
Economic Times
22-04-2025
- Business
- Economic Times
Bank stocks in focus as RBI eases final LCR norms, offers relief to lenders
Banking stocks are expected to be in the spotlight on Tuesday after the Reserve Bank of India (RBI) issued its final guidelines on LCR. The final regulations have set an added 'run-off' factor of 2.5% for retail and small business deposits that are accessible through internet and mobile banking (IMB). This is a reduction from the 5% proposed in the draft guidelines. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Banking stock will be in focus on Tuesday after the Reserve Bank of India RBI ) on Monday released the final guidelines on the Liquidity Coverage Ratio (LCR), offering relief to banks through more lenient rules than initially LCR norms, aimed at mitigating risk arising from a likelihood of substantial online withdrawals, mandate banks to set aside more money in high-quality liquid assets (HQLAs).'Reserve Bank is sanguine that these measures will enhance the liquidity resilience of banks in India, and further align the guidelines with the global standards in a non-disruptive manner,' it said, adding that final rules will kick in from April final norms mandated an additional 'run-off' factor of 2.5% for retail and small business customer deposits that can be accessed via internet and mobile phone (IMB) banking. The draft norms had proposed 5% for retail deposits. The run-off factor implies the percentage of deposits withdrawn by a depositor in the event of US-based Silicon Valley Bank-like simply means that now banks will have to set less money that what they would have to do if the draft norms, released in July, were implemented without any stable retail deposits enabled with IMB will have a 7.5% run-off factor, while less stable deposits enabled with IMB would have a 12.5% run-off factor. That compares with 5% and 10%, respectively, agency ICRA had estimated an adverse impact of 14-17% on the reported LCR based on the draft guidelines. According to ICRA, with an estimated HQLA of almost Rs 45-50 lakh crore for the banking system, this could free up the lendable resources by almost Rs 2.7-3.0 lakh crore and support the credit growth of the banks."This headroom can be equivalent to 1.4-1.5% of additional credit growth potential for the banking system," said Anil Gupta, Senior Vice President - Financial Sector Ratings, the final guidelines, the central bank has also rationalised the composition of wholesale funding from 'other legal entities'. Consequently, funding from non-financial entities like trusts (educational, charitable and religious), partnerships, LLPs, etc. shall attract a lower run-off rate of 40% against 100% draft issued by the RBI in July had proposed implementation of the rules from April 2025. However, the RBI Governor Sanjay Malhotra had said in February that a clutch of revised regulations, including the LCR framework, will not be implemented in refers to the stock of HQLAs, primarily government securities, that banks must maintain to tide over a hypothetical 30-day stress scenario in which such outflows on the July draft, it is estimated that banks will need to buy additional government securities worth ₹4-6 lakh crore as HQLAs if the LCR norms are implemented without Monday, the central bank said that it has undertaken an impact analysis of the final norms measures based on data submitted by banks, as of December 31, 2024.'It is estimated that the net impact of these measures will improve the LCR of banks, at the aggregate level, by around 6 percentage points as on that date. Further, all the banks would continue to meet the minimum regulatory LCR requirements comfortably,' it said.
Time of India
22-04-2025
- Business
- Time of India
Bank stocks in focus as RBI eases final LCR norms, offers relief to lenders
Banking stock will be in focus on Tuesday after the Reserve Bank of India ( RBI ) on Monday released the final guidelines on the Liquidity Coverage Ratio (LCR), offering relief to banks through more lenient rules than initially proposed. The LCR norms, aimed at mitigating risk arising from a likelihood of substantial online withdrawals, mandate banks to set aside more money in high-quality liquid assets (HQLAs). 'Reserve Bank is sanguine that these measures will enhance the liquidity resilience of banks in India, and further align the guidelines with the global standards in a non-disruptive manner,' it said, adding that final rules will kick in from April 2026. The final norms mandated an additional 'run-off' factor of 2.5% for retail and small business customer deposits that can be accessed via internet and mobile phone (IMB) banking. The draft norms had proposed 5% for retail deposits. The run-off factor implies the percentage of deposits withdrawn by a depositor in the event of US-based Silicon Valley Bank-like disruptions. This simply means that now banks will have to set less money that what they would have to do if the draft norms, released in July, were implemented without any modifications. Accordingly, stable retail deposits enabled with IMB will have a 7.5% run-off factor, while less stable deposits enabled with IMB would have a 12.5% run-off factor. That compares with 5% and 10%, respectively, now. Rating agency ICRA had estimated an adverse impact of 14-17% on the reported LCR based on the draft guidelines. According to ICRA, with an estimated HQLA of almost Rs 45-50 lakh crore for the banking system, this could free up the lendable resources by almost Rs 2.7-3.0 lakh crore and support the credit growth of the banks. "This headroom can be equivalent to 1.4-1.5% of additional credit growth potential for the banking system," said Anil Gupta, Senior Vice President - Financial Sector Ratings, ICRA. Also Read : Bajaj Finance, IndiGo among 10 largecap stocks where FIIs raised stake in Q4 In the final guidelines, the central bank has also rationalised the composition of wholesale funding from 'other legal entities'. Consequently, funding from non-financial entities like trusts (educational, charitable and religious), partnerships, LLPs, etc. shall attract a lower run-off rate of 40% against 100% currently. The draft issued by the RBI in July had proposed implementation of the rules from April 2025. However, the RBI Governor Sanjay Malhotra had said in February that a clutch of revised regulations, including the LCR framework, will not be implemented in hurry. LCR refers to the stock of HQLAs, primarily government securities, that banks must maintain to tide over a hypothetical 30-day stress scenario in which such outflows occur. Based on the July draft, it is estimated that banks will need to buy additional government securities worth ₹4-6 lakh crore as HQLAs if the LCR norms are implemented without modification. On Monday, the central bank said that it has undertaken an impact analysis of the final norms measures based on data submitted by banks, as of December 31, 2024. 'It is estimated that the net impact of these measures will improve the LCR of banks, at the aggregate level, by around 6 percentage points as on that date. Further, all the banks would continue to meet the minimum regulatory LCR requirements comfortably,' it said. Also Read: Rich Dad Poor Dad author Robert Kiyosaki predicts Bitcoin will double to $200k by 2025 ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Times of Oman
06-02-2025
- Business
- Times of Oman
RBI to look for additional measures other than rate cut to infuse enough liquidity: Report
New Delhi: The Reserve Bank of India (RBI) will have to look for additional measures other than a rate cut to infuse enough liquidity in the banking system according to a report by Emkay Research. Among other options suggested by Emkay Research, includes another round of Open Market Operations (OMO) worth Rs 30,000 crore to inject liquidity into the economy. The report highlighted that the total liquidity infusion through OMO in the current financial year (FY25) could surpass Rs 90,000 crore. It said, "We expect another round of ~Rs300bn OMOs, implying Rs900 bn+ in total in FY25E. A CRR cut is a close call, but a temporary cut may not address the underlying banking stress". The report noted that a temporary CRR reduction may not effectively resolve the ongoing stress in the banking sector. Instead, the RBI needs to focus on easing upcoming tighter Liquidity Coverage Ratio (LCR) norms, which are set to take effect from April 2025. Additionally, relaxing lending standards could be a preferred policy tool to address liquidity concerns. The report suggested that while a conventional 25 basis points rate cut in the upcoming Monetary Policy Committee (MPC) meeting is not a major topic of debate in the market, investors and analysts will closely watch for additional policy measures beyond a rate cut. The central bank may continue its strategy of "easing by stealth" through unconventional policy tools, such as liquidity injections and regulatory adjustments. The RBI is also expected to take steps to address stress in the non-sovereign money market. Furthermore, the report indicated that the central bank could consider additional measures to ease capital account restrictions, possibly through the Foreign Currency Non-Resident (FCNR) route. The RBI has already taken significant liquidity-boosting measures in recent months. Despite these efforts, system liquidity remains tight. While the overall liquidity deficit has eased from a high of Rs 3.1 trillion at the end of January 2025, Emkay Research estimates that it could still remain elevated at Rs 2.5-2.8 trillion by the end of FY25. The core deficit is expected to range between Rs 1.1-1.3 trillion. If the RBI finds this level of liquidity shortfall uncomfortable for policy transmission, it may introduce additional measures to support the economy, especially as the outlook for the depth of the interest rate cut cycle remains uncertain. The market will keenly watch RBI's next policy moves, particularly in addressing liquidity constraints and banking sector stress, as these factors will play a crucial role in shaping economic conditions in the coming months.
