Most of banking stocks trade higher as RBI eases LCR norms

Most of banking stocks edged higher after Reserve Bank of India (RBI) proposed easier liquidity norms. RBI has directed banks to assign additional 2.5% liquidity buffer rate to internet and mobile banking-enabled retail and small business customer deposits from April 1, 2026. Earlier in July last year, the RBI had proposed an additional 5% run-off factor, which means the probability of deposits getting withdrawn/transferred, including in stressed situations.

HDFC Bank is currently trading at Rs. 1965.45, up by 37.90 points or 1.97% from its previous closing of Rs. 1927.55 on the BSE. The scrip opened at Rs. 1940.00 and has touched a high and low of Rs. 1970.65 and Rs. 1935.20 respectively. 

Kotak Mahindra Bank is currently trading at Rs. 2285.80, up by 43.25 points or 1.93% from its previous closing of Rs. 2242.55 on the BSE. The scrip opened at Rs. 2256.55 and has touched a high and low of Rs. 2301.55 and Rs. 2247.65 respectively.

ICICI Bank is currently trading at Rs. 1414.00, up by 4.60 points or 0.33% from its previous closing of Rs. 1409.40 on the BSE. The scrip opened at Rs. 1414.65 and has touched a high and low of Rs. 1418.50 and Rs. 1398.65 respectively.

As per the new guidelines, a bank shall assign an additional 2.5% run-off factor for retail deposits which are enabled with internet and mobile banking facilities (IMB) i.e., stable retail deposits enabled with IMB shall have 7.5% run-off factor and less stable deposits enabled with IMB shall have 12.5% run-off factor (as against 5 and 10% respectively, prescribed currently).

RBI, in its draft, had proposed implementation of additional run-off factor from April 1, 2025. In February this year, RBI Governor Sanjay Malhotra had indicated that the liquidity coverage ratio implementation will be deferred by at least a year. Banks covered under liquidity coverage ratio (LCR) framework are required to maintain a stock of high-quality liquid assets (HQLA) to cover the expected net cash outflows in the next 30 calendar days. In addition, the latest guidelines also rationalise the composition of wholesale funding from 'other legal entities'. Consequently, funding from non-financial entities like trusts (educational, charitable and religious), partnerships, LLPs, shall attract a lower run-off rate of 40% as against 100% currently.

The central bank estimates that the measure will improve banks’ LCR by around 6 percentage points at aggregate as on that date, while all banks will continue to meet the minimum regulatory LCR requirements comfortably. Further, it added that, Reserve Bank is sanguine that these measures will enhance the liquidity resilience of banks in India, and further align the guidelines with the global standards in a non-disruptive manner. The revised instructions will become applicable from April 1, 2026, to give the banks adequate time to transition their systems to the new standards for LCR computation.