Bank stocks are the biggest movers and shakers today. Almost all the bank stocks, especially PSU stocks are up, led by Union Bank, which is currently over 7% at Rs.130.80, with a spike up in volume of almost 3.5 times. The entire Bank Index is up 13.43%, with 10 stocks in the green of the total 12 stocks in the index. Canara Bank, PNB, BoI, SBI, BoB, Federal Bank and all the private sector banks – Kotak Mahindra, ICICI Bank, IndusInd Bank, Yes Bank, Axis Bank and IDBI Bank, all are up.

All banking stocks are up on the bank of RBI’s notification yesterday. It has stated that industry-wide concerns have been expressed about the potential stresses on the asset quality and consequential impact on the performance / profitability of the banks. This may necessitate some lead time for banks to raise capital within the internationally agreed timeline for full implementation of the Basel III Capital Regulations. Accordingly, the transitional period for full implementation of Basel III Capital Regulations in India is extended upto March 31, 2019, instead of as on March 31, 2018. This will also align full implementation of Basel III in India closer to the internationally agreed date of January 1, 2019.

This is very good news for the banks, more so PSU banks as it means that they now get more time to work on this Basel III, while they can focus completely on rectifying the large amount of NPAs they are currently dealing with.