Bank Stocks Under Pressure After RBI Steps Up Efforts to Curb Rupee Fall
April 02, 2026
Stocks of Indian lenders are trading in the red in Thursday’s trade as the banking regulator further intensified its efforts to contain the decline of the rupee. Bank Nifty was trading over 2.6 percent lower at around 50,071 points. All fourteen constituents of the index were trading in the red at the time of writing
Stocks of Indian lenders are trading in the red in Thursday’s trade as the banking regulator further intensified its efforts to contain the decline of the rupee.
Bank Nifty was trading over 2.6 percent lower at around 50,071 points. All fourteen constituents of the index were trading in the red at the time of writing.
The decline was seen across private and public sector banks.
Federal Bank was the worst performer, with a decline of 4 percent, followed by State Bank of India, which fell over 3.7 percent. While HDFC Bank remained better off than others, it still lost around 1.4 percent during the trade.
Other losers included Union Bank (down 3.5 percent), Bank of Baroda (down 3.4 percent), IndusInd Bank (down 3.4 percent), AU Small Finance Bank (down 3.3 percent), and Canara Bank (down 3.2 percent).
Bank Nifty has declined over 6.6 percent in the last one week and over 16 percent in one month.
The sharp sell-off was a result of investors reacting to the potential financial impact of the Reserve Bank of India’s tighter foreign exchange rules.
The regulator has tightened its foreign exchange regulations, barring banks from offering non-deliverable forward (NDF) contracts to their clients.
The latest measures are aimed at curbing excessive speculation in the currency market, particularly arbitrage trades that had built up in recent weeks.
However, these curbs are now raising concerns about mark-to-market losses and reduced trading income for banks.
Analysts are concerned that tighter regulations could lead to significant losses for lenders as they unwind large forex positions.
According to estimates, the move could result in a hit running into thousands of crores for the banking sector, denting near-term profitability.
The central bank has already capped banks’ net open positions in the rupee and restricted certain derivative transactions, forcing lenders to scale down previously profitable trades.
Bank Nifty was trading over 2.6 percent lower at around 50,071 points. All fourteen constituents of the index were trading in the red at the time of writing.
The decline was seen across private and public sector banks.
Federal Bank was the worst performer, with a decline of 4 percent, followed by State Bank of India, which fell over 3.7 percent. While HDFC Bank remained better off than others, it still lost around 1.4 percent during the trade.
Other losers included Union Bank (down 3.5 percent), Bank of Baroda (down 3.4 percent), IndusInd Bank (down 3.4 percent), AU Small Finance Bank (down 3.3 percent), and Canara Bank (down 3.2 percent).
Bank Nifty has declined over 6.6 percent in the last one week and over 16 percent in one month.
The sharp sell-off was a result of investors reacting to the potential financial impact of the Reserve Bank of India’s tighter foreign exchange rules.
The regulator has tightened its foreign exchange regulations, barring banks from offering non-deliverable forward (NDF) contracts to their clients.
The latest measures are aimed at curbing excessive speculation in the currency market, particularly arbitrage trades that had built up in recent weeks.
However, these curbs are now raising concerns about mark-to-market losses and reduced trading income for banks.
Analysts are concerned that tighter regulations could lead to significant losses for lenders as they unwind large forex positions.
According to estimates, the move could result in a hit running into thousands of crores for the banking sector, denting near-term profitability.
The central bank has already capped banks’ net open positions in the rupee and restricted certain derivative transactions, forcing lenders to scale down previously profitable trades.