Bank Nifty Jumps After RBI Announcement; Led By Ujjivan SFB, Kotak Bank Shares

The Bank Nifty index rose sharply on Wednesday after the Reserve Bank of India (RBI) announced key steps to improve the economy in the face of the country's current Covid situation.

The Reserve Bank of India boosted lending, liquidity, and stressed asset provisions, among other things, in the financial sector. Both private and public sector bank stocks were soaring.

KotakMahindra Bank took lead surging by nearly 2.14% followed by AU Bank and IndusInd Bank climbing 2.10% and 2% respectively. Axis Bank jumped 2.09%.

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On May 5, shares of Ujjivan Small Finance Bank, Equitas Small Finance Bank, AU Small Finance Bank, and Suryoday Small Finance Bank rose 1-6 percent after Reserve Bank of India (RBI) Governor Shaktikanta Das announcement.

The Reserve Bank of India was keeping an eye on the coronavirus situation and its effects on the economy. According to Das, the global economic outlook is extremely unpredictable and fraught with downside risks.

Bank Nifty was trading at 2.09 pm IST, 32,708 up by 437 points or 1.36%. The index has touched an intraday high of 32,844.40.

Das stated that the central bank will conduct a special operation worth Rs 10,000 crore at the repo rate. During an unscheduled address, Das said, "Small finance banks (SFBs) have been playing a prominent role by serving as a conduit for the last-mile supply of credit to individuals and small businesses."

The Nifty PSU Bank index was up 1.96 percent at 2,154.65. Canara Bank, Union Bank, Bank of Baroda, Punjab & Sind Bank, Bank of India, and Indian Bank were among the best performers, with gains ranging from 1.5 to 4%.

ICICI Bank gained 1.8 percent, HDFC Bank gained 1.4 percent, and SBI gained 1.3 percent, respectively. Federal Bank and RBL Bank both saw their stock prices rise by more than 1%.

Das also announced that the Reserve Bank of India (RBI) has now authorized small finance banks (SFBs) to make new loans to small microfinance institutions (MFIs). Banks can use 100% of their floating provisions/counter-cyclical provisioning to make specific provisions for nonperforming assets in the meantime.