ICICI, Axis Bank, and Other Lenders Rise as RBI Releases Guidelines on Forex Measures Announced Last Week

Mumbai, June 9: Banking stocks rallied sharply on Tuesday, with heavyweight lenders such as ICICI Bank, Axis Bank, and Kotak Mahindra Bank advancing as investors cheered the Reserve Bank of India publishing guidelines on the latest measures aimed at attracting foreign currency inflows and supporting the rupee. The gains helped the banking gauge outperform the broader market.  

The rally was broad-based, with the Nifty Bank index rising more than 1%, as investors bet that the RBI’s forex-support measures could improve liquidity conditions and boost the sector’s ability to mobilise foreign currency deposits. ICICI Bank share price rose as much as 1.8%, Axis Bank share price advanced as much as 2%, and Kotak Mahindra Bank share price rose as much as 1.4%. 

RBI Measures Drive Optimism 

Kotak Mahindra Bank jumped after RBI came out with detailed guidelines on its forex measures. Source: NSE 

The central bank last week unveiled a package of steps to strengthen foreign exchange inflows amid pressure on the rupee and heightened global volatility. Among the key measures was a concessional swap facility available until September for banks raising three- to five-year foreign currency non-resident [FCNR(B)] deposits. The RBI will compensate banks for hedging costs on such deposits, making them more attractive for lenders and overseas depositors. 

The RBI has also permitted banks to offer leverage to clients investing in these deposits, a move expected to further encourage foreign currency inflows. Market participants view these steps as positive for the banking sector as they can help strengthen deposit mobilisation while supporting overall system liquidity. RBI published detail guidelines for these measures after market hours on Monday. 

Rupee Support Measures Boost Sentiment 

ICICI Bank surged after investors cheered guidelines on concessional swap facility. Source: NSE 

Investor sentiment toward banking stocks has improved after the RBI complemented its monetary policy decision with a series of external-sector measures designed to attract medium-term dollar inflows. Analysts expect the initiatives to bolster India’s balance of payments position at a time when elevated crude oil prices and global uncertainties have increased pressure on emerging-market currencies. 

The measures had already sparked a strong rebound in the rupee last week, with the currency posting its biggest single-day gain in two months after the announcements. A more stable currency environment is generally viewed as supportive for banks, particularly those with overseas liabilities and foreign-currency businesses.  

Banking Sector Reclaims Leadership 

Tuesday’s rally marks a sharp turnaround for banking stocks, which had faced bouts of volatility earlier this year amid concerns over regulatory changes, liquidity conditions and the impact of rupee-support measures on profitability. Investors now appear to be focusing on the potential benefits of improved forex inflows and stronger liquidity support from the central bank.  

With all constituents of the Bank Nifty advancing, the sector once again emerged as a key driver of market gains, reinforcing its position as one of the most influential segments of the Indian equity market. 

Source

•  https://www.nseindia.com/get-quote/equity/KOTAKBANK/Kotak-Mahindra-Bank-Limited, https://www.nseindia.com/get-quote/equity/ICICIBANK/ICICI-Bank-Limited, https://www.nseindia.com/get-quote/equity/AXISBANK/Axis-Bank-Limited