India’s bank stocks dropped on Thursday after the central bank intensified its crackdown on
speculative activity in the rupee by targeting corporate
arbitrage, requiring lenders to close contracts in open markets
by removing leeway to sell to corporates.
The Nifty Bank index slid 2.6%, private lenders
and state-owned banks lost 2.1% and
3.2%, compared to a 1.9% decline in the benchmark Nifty 50
.
The tighter rules are a negative for banks as it may lead to
higher losses, said Prakhar Sharma and Vinayak Agarwal, analysts
at Jefferies.