ICICI Securities believes these steps are in the right direction and would be beneficial for customers and the banking sector, as a whole, in the long run. However, the recent rally in stock price of financials
has largely played out near term positives, it said.
Nifty Bank and Nifty Financial Sector indices pared gains later and were down 0.45 per cent each after advancing nearly 1 per cent and 0.7 per cent, respectively in the opening deals.
Over the last five years, private sector banks have rapidly gained market share to around 30 per cent (2020) from around 18 per cent (2015), and we see this trend accelerating at a faster pace now, said analysts at Motilal Oswal Financial Services in sector update.
"Mergers & acquisitions opportunities may also increase in the system as corporates with deep pockets may adopt this route rather than building from scratch. Fit and proper criteria, increased surveillance on group entities, the maximum allowed promoter shareholding, and regulatory cost of CRR, SLR, etc. have been the key considerations thus far for applying and granting banking licenses," it said.
The brokerage firm further said it remains to be seen how corporate India, NBFCs, and the RBI
would approach the matter this time around, once final guidelines are out. Prima facie, we see IDFC Ltd, Bajaj Finance, L&TFH, Equitas, and Ujjivan to be key beneficiaries.