Shares of private lenders such as Yes Bank and IndusInd Bank fell sharply in trade today due to concerns over violation of corporate governance norms and exposure to a large housing finance company (HFC). Overall negative sentiment dragged down stocks of most private banks, including that of RBL Bank and IDFC First Bank. Lakshmi Vilas Bank also reeled under selling pressure after Reserve Bank of India (RBI) placed the bank in the prompt corrective action list on Saturday.
While shares of Yes Bank continued their downward spiral since Monday’s trade, plunging 25% today on the back of concerns over inadequate liquidity position and declining asset quality, IndusInd Bank shares fell 11% despite the private lender issuing a clarification that its exposure to a large HFC is fully/strongly collateralised with no overdue. Yes Bank shares are at a decade’s low now.
Shares of Lakshmi Vilas Bank (LVB) were also under pressure, down nearly 5%, due to concerns over proposed merger with Indiabulls Housing Finance not going through. The bank also clarified that PCA initiated against the bank by RBI is completely independent of the FIR filed by Religare Finvest Ltd. at the Economic Offenders Wing, New Delhi.
“The bank reiterates that the civil suit by Religare Finvest followed by a criminal complaint in respect of the same matter relating to the fixed deposits are frivolous and a desperate attempt to malign the bank and its directors," the bank said in a release.
Shares of RBL Bank were 17% lower, while IDFC First Bank stock was down nearly 10% in today’s trade. The Nifty Bank index was trading 2.3% lower at 28, 458 from the previous close.