At 02:50 pm, Nifty Bank
index -- which had hit an intra-day low of 2 per cent to trade at 20,958 -- was down 1.5 per cent, as compared to 0.86 per cent decline in the Nifty 50 index. In the past one week, Nifty Bank
index has slipped 6 per cent, as against 3.3 per cent fall in the benchmark index. IndusInd Bank
has tanked 15 per cent while Bandhan Bank has plunged 12 per cent. RBL Bank and Federal Bank, meanwhile, have slipped 11 per cent each during the week.
According to a Business Standard report, between 2010 and 2017, several transactions went through Indian banks that were flagged as top-secret ‘Suspicious Activity Reports’ or SARs by the US Treasury Department’s FinCEN for suspected money laundering, terror financing, drug dealing, and financial fraud.
Such transactions were part of $2 trillion suspicious transfers flagged by the top US authority in the FinCEN list. The International Consortium of Investigative Journalism (ICIJ) obtained the data that traces these global transactions, which happened between 1999 and 2017. Part of this data was released by the consortium on its website. CLICK HERE FORE REPORT
Meanwhile, last week, rating agency India Ratings and Research (Ind-Ra) revised its outlook on the banking sector to Negative for 2HFY21 from Stable. This was on expected spike in stressed assets, higher credit costs, weaker earnings on account of interest reversals and lower fee income, and muted growth prospects in the wake of the measures taken to contain the spread of Covid-19.
Additionally, capital buffers for most public sector banks (PSBs) remain modest, As per Ind-Ra’s bear case, the spike in stressed assets due to pandemic is expected to double the credit costs for banking system than estimated pre-Covid-19 levels for FY21.