SBI surges 8% to hit 14-month high on currency ban, ahead of Q2 nos

NEW DELHI: Shares of State Bank of India (SBI) surged over 8 per cent in Thursday’s trade amid hope that the government move to ban currency notes of Rs 500 and Rs 1,000 denominations as part of its clampdown on black money could lead to rate cuts and boost bank deposits.

The stock jumped also after the lender told BSE that it was taking proactive measures to ensure full security of its debit cards. The bank is scheduled to report its Q2 earnings on Friday.

The stock climbed 8.73 per cent to hit a 14-month high of Rs 282.45 in morning trade.

CLSA said a substantial part of the $220 billion currency in circulation may come back into the banking system as a result of the government move.

Assuming 25 per cent conversion, bank deposits could jump up to 4 per cent, negating the impact of the redemption of NRI deposits mobilised three years ago under former RBI governor Raghuram Rajan, it said.

“With credit growth remaining weak, these funds may be invested in bonds, driving the yields down. Potential asset (property) price deflation and demand reduction should mean inflation will stay low, which will create space for a 75 bps rate cut over the next 12 months,” CLSA said.


Meanwhile, the bank in a clarification to BSE said it had proactively taken measures to ensure full security for all cards following the recent debit card data breach.