India's bank stocks near 1-year low as RBI's FX crackdown fans loss concerns (updated)

ICICI Bank

02/04/2026 06:24

Updates throughout

April 2 (Reuters) - India's bank stocks dropped to their lowest levels in nearly a year on concerns over potential losses after the central bank intensified its crackdown on speculative activity in the rupee.

The Nifty Bank index .NSEBANK slid as much as 2.8% to 50,004.30 points - its lowest level since April 9, 2025 - with all constituents trading lower.

The index has fallen 4.3% this week following the Reserve Bank of India's curbs, underperforming the benchmark Nifty 50 .NSEI, which is down 2.6%.

On Wednesday, the RBI barred banks from offering rupee non-deliverable forwards to resident and non-resident clients, days after it put a limit of $100 million on banks' net open rupee positions.

Jefferies said banks were hoping to mitigate losses stemming from the initial measures by transferring or selling part of their positions to corporates, hedge funds and other clients.

The fresh curbs may bring the losses back to original estimates or a tad higher at 40 billion rupees to 50 billion rupees ($428.05 million-$535.07 million), the brokerage said.

The RBI's measures come as the rupee INR=IN has hit a string of all-time lows on worries over spillovers from the Iran war. The currency fell 4.24% in March, its worst monthly drop in six years, before the latest curbs helped it rise 1.4% to 93.53 per U.S. dollar in early trade on Thursday.

Private lenders HDFC Bank HDBK.NS and ICICI Bank ICBK.NS dropped 1.4% each on Thursday, while state-run banks logged sharper losses. State Bank of India SBI.NS was down 2.9%, while Punjab National Bank PNBK.NS, Canara Bank CNBK.NS and Union Bank of India UNBK.NS lost 3.4%, 3.6% and 3.9%, respectively.

Jefferies expects banks to book part of their losses in the January-March and April-June quarters, and said foreign lenders account for 45% of the currency derivatives market and related losses, while private banks have a 40% share.

($1 = 93.4460 Indian rupees)

India's bank stocks' index near one-year low https://reut.rs/4v07llP

Forex derivative market in India is dominated by larger banks https://reut.rs/47AWgO6

Market share in USD-INR derivative contracts https://reut.rs/4c2fv4u

 (Reporting by Vivek Kumar M in Bengaluru and Ashwin Manikandan in Mumbai; Editing by Sonia Cheema)

 ((VivekKumar.M@thomsonreuters.com;))