Banking stocks plunge; Bank of Baroda, Union Bank tank up to 8%

MUMBAI: Banking stocks today fell up to 8 per cent after RBI proposed incremental provisioning and capital requirements for banks' exposure to corporates having unhedged forex exposure.

Among bluechips, SBI's shares dropped 4.58 per cent to Rs 1,899.60, ICICI Bank was down by 1.46 per cent to Rs 1,063.40 and HDFC Bank fell by 0.99 per cent to Rs 651.15 on the BSE.

Bank of Baroda tumbled 7.83 per cent, Union Bank plunged 7.43 per cent, Bank of India (6.23 per cent), PNB (5.27 per cent) and Federal Bank (3.25 per cent).

Following the losses in these stocks, the BSE banking index lost 2.33 per cent to close the day at 12,969.26.

Market experts said the draft norms on banks' exposure to corporates with unhedged forex led to selling in banking counters.

"The guidelines suggest higher provisions, risk weights for exposure to corporates with unhedged foreign currency exposures (UFCE). Since provisions/risk weights apply to total banking exposure, it will impact banks...." brokerage firm Emkay Global said.

Meanwhile, in the broader market, the BSE benchmark Sensex was down by 286.06 points and ended the day at 19,177.76.