Indian bank stocks gain as government approves $1.9 bln credit guarantee scheme

Axis Bank

06/05/2026 06:22

** Indian banks rise as government approves an emergency credit guarantee programme worth $1.9 billion to support businesses facing short-term liquidity stress due to the Iran war

** Banks .NSEBANK and private banks .NIFPVTBNK climb ~1% each, state-owned lenders .NIFTYPSU up 1.3%, powering gains on benchmark Nifty 50 .NSEI, which is up 0.4%

** The scheme will provide additional credit support to eligible borrowers, with the government offering 100% guarantee coverage for small and medium enterprises and 90% coverage for other firms and the airline sector

** Citi says MSME-focussed lenders such as Axis Bank AXBK.NS, RBL Bank RATB.NS and state-banks will be the key beneficiaries; scheme is net positive for credit sentiment, asset quality and financial stability

** "The scheme is a net positive for banks, a modest loan growth tailwind and a more meaningful near-term asset quality buffer," Nomura says

** YTD, NSEBANK and NIFPVTBNK down 7.5% and 8.5%, respectively, NIFTYPSU up 0.3%; Nifty 50 down 7.6%

 (Reporting by Kashish Tandon in Bengaluru)

 ((Kashish.tandon@thomsonreuters.com))