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Banking index drops after RBI move

October 28, 2009

The BSE banking index slid more than 1.8 percent on concerns bank profits would be hit after the RBI raised the provision ratio for bad debts on Tuesday.INDIA-STOCKS/6PCT

The RBI on Tuesday asked banks to increase the minimum provision ratio for bad debts to 70 percent from 10 percent by September 2010.

Top private lender ICICI Bank, which has over 7 percent weightage in the 30-share sensitive index, slipped 3.1 percent to 810 rupees.

Shares in State Bank of India (SBI), which had their biggest fall in 10 weeks on Tuesday, gained 0.69 percent in today’s trade to 2218 rupees.

The BSE Realty Index ended 1.5 pct down, with the main losers being HDFC Bank (down 3.1 percent), Canara Bank (down 2.2 percent), Karnataka Bank (down 2.26 percent) and Axis Bank (down 2.4 percent).

Do you think banking stocks will fall further on RBI’s move?

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