BSE Sensex and Nifty traded higher today led by gains in banks after Reserve Bank of India eased financing norms for infrastructure and affordable housing.
The Reserve Bank of India on Tuesday said it will allow long-term bonds raised by banks for infrastructure lending to be exempted from mandatory reserve requirements, in line with the government's announcement in the budget last week. The bonds issued by banks, to be aimed at the infrastructure sector including affordable housing, will be required to have a minimum tenure of seven years.
The BSE banking index was up over 1.5 per cent. ICICI Bank, SBI, and Axis Bank and PNB were up between 1.5-3 per cent. IDFC rose 6.6 per cent to be among the biggest gainer among the Nifty stocks.
Kotak Mahindra Bank, which announced in-line Q1 earnings today, was up nearly 1 per cent.
Housing finance companies HDFC and LIC Housing Finance were lower today on apprehensions that banks would give them a tougher competition in housing loans. HDFC fell over 2 per cent while LIC Housing fell over 4 per cent. Keki Mistry, vice-chairman and chief executive of HDFC, however said he does not see banks giving NBFCs higher competition for housing loans. According to the new norms, banks have to extend loans for affordable housing from long-term borrowings which are not cheap unlike the CASA deposits, he added.
At 1:47 p.m., Sensex rose 117 points to 25,345 while Nifty was up 34 points at 7,561.