Bank shares rise on tabling of new bill
Dec 10 2012 , Mumbai
Banking bill to pave the way for new licences
The Banking Laws (Amendment) Bill, 2011, calls for increasing the voting rights of large shareholders in private banks to 26 per cent from 10 per cent, increase in voting ceiling in state-run banks to 10 per cent from one per cent, and giving the central bank more powers.
Dipen Shah, senior vice-president (private client group research), Kotak Securities said, “The bank stocks gained in anticipation of presentation and passage of the Banking Laws (Amendment) Bill, which basically will facilitate increasing the voting rights and issue of the new banking licenses.”
The Reserve Bank of India (RBI) has held back approvals of new bank licenses, urging the government to first get the bill passed in Parliament.
“The bank stocks also gained, as expectations are also building ahead of the next week’s RBI monetary policy review meeting,” Shah said. The central bank undertakes monetary policy review on Tuesday (December 18).
The broader equity market was in a consolidation mode and showed sideways movement with the Sensex closing at 19,409.69 point with a fall of 14.41 points and Nifty at 5,908.90 up by 1.50 per cent.
Foreign institutional investors (FIIs) who were net buyers of stocks worth Rs 698 crore while domestic institutional investors held exactly opposite view in the market were net sellers of equities worth Rs 586 crore.
State Bank of India’s subsidiaries gained the most in expectation of passing of the Banking Laws Amendment Bill-State Bank of Mysore (17.39 per cent), State Bank of Bikaner and Jaipur (13.66 per cent), State Bank of Travancore (14.53 per cent).
All other public sector banks too, gained between one and five per cent. Bank of India (4.19 per cent), Corporation Bank (5.12 per cent), Syndicate Bank (4.45 per cent), Central Bank of India (2.60 per cent), Punjab National Bank (2.27 per cent), Union Bank of India (4.05 per cent).
Smaller private sector banks too were big gainers. Shares of Dhanalaxmi Bank (6.01 per cent), Development Credit Bank (5.10 per cent), IndusInd Bank (1.41 per cent), Federal Bank (4.93 per cent), Kotak Mahindra Bank (1.34 per cent) witnessed gains.
However, bigger private sector banks did not find favour with investors and closed in the red — ICICI Bank (1.12 per cent), Axis Bank (0.40 per cent) while HDFC Bank closed flat without any change in its share price.