Home >News >India >Shares of banks, housing finance companies rally on RBI booster shots

Shares of bank, financial services and housing finance companies rallied on Reserve Bank of India’s boosters to enhance liquidity and uplift business growth going forward. The BSE Bankex jumped nearly 1.5% on Friday, led majorly by HDFC Bank, ICICI Bank, State Bank of India and Axis Bank.

Housing finance companies such as LIC Housing Finance jumped 8%, HDFC gained 3%, GIC Housing Finance jumped 8%, Indiabulls Housing Finance Ltd were up 3% at 10.55 am.

The RBI has decided to rationalize the risk weights and link them to loan-to-value (LTV) ratios only for all new housing loans sanctioned up to 31 March, 2022.

“Under extant regulations, differential risk weights are applicable to individual housing loans, based on the size of the loan as well as the LTV ratio. In recognition of the role of the real estate sector in generating employment and economic activity, it has been decided to rationalize the risk weights and link them to LTV ratios only for all new housing loans sanctioned up to March 31, 2022. This measure is expected to give a fillip to the real estate sector," said Shaktikanta Das, governor, RBI.

As widely expected, the central bank maintained status quo in key interest rates, while keeping an accommodative stance in the monetary policy review. At 10.55 am, the BSE Sensex was at 40,409.53, up 226.86 points or 0.56%. The Nifty was at 11,879.40, up 44.80 points or 0.38%.

As the economy continues to limp due to disruption caused by covid-19, RBI provided impetus towards reviving the economy by introducing certain additional measures. “These measures are intended to enhance liquidity support for financial markets, regulatory support to improve the flow of credit to specific sectors within the ambit of the norms for credit discipline, provide a boost to exports and deepen financial inclusion and facilitate ease of doing business by upgrading payment system services," said Das.

The focus of liquidity measures by the RBI will include revival of activity in specific sectors that have both backward and forward linkages, and multiplier effects on growth.

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