Why banking stocks are falling?
Prices for banking stocks are following and its not just Indusind Bank but all the other banks as well. Reasons for such fall are in numbers. We will talk about the important ones.
1. The holding of the promoter in a bank
2. Moratorium period on banks
3. Lockdown Effects
4. Yes Bank situation
5. Capex problem
As per the SEBIs new rule promoters have to lower down their stake in a bank to 15% or lower. Promoters are finding the problem to deal with such rules as in such case they will lose their control over a bank and will not be able to guide their bank to the path of success.
Mr Uday Kotak – Kotak bank and Hinduja Brothers – Indusind Bank is in talks with authorities over this concern.
Moratorium period is affecting banks cash ratio as no bank is allowed to collect any EMI, Premium payment from their customers. On the other hand, a bank has fixed expenses to pay off regularly.
Due to lockdown, no Bank executives especially sales executives are not able to visit or generate any sales for a bank, which will help a bank to generate cash to pay off its expenses.
Yes, Bank and PNB Bank shows that investment in bank stock may lead to trouble. It lowers down the trust factor on banking shares. Yes Bank shareholders are affected at past and will be in future as well, at least for some more time.
Capex – Capital expenditure is banks biggest problem, for now, we can see every leading bank we know is looking for QIP to raise money to build or say maintain its CAPEX so they can keep a bank running smoothly and things can go as usual.