Why bank stocks falls much today ??

Bank stocks fell as much 10 per cent in Monday’ weak trade as the government announced that no fresh insolvency cases under Insolvency and Bankruptcy Code (IBC) will be initiated for up to one year. IndusInd Bank share price tanked 10 per cent to Rs 376.95 apiece, while ICICI Bank shares tumbled 9 per cent to Rs 293.50 per equity. HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank and State Bank of India (SBI) contributed the most to indices’ losses. SBI share price was down 6 per cent while HDFC Bank and Kotak Mahindra Bank were down 5 per cent each. “We believe that this will be a setback for banks looking for resolution/liquidation under the legal umbrella, with no risk of witch-hunting later on and more so when another wave of corporate NPAs could be on way,” Emkay Global Financial Services said in its latest research report.

Under IBC related matters, FM Sitharaman said many businesses have been severely affected by lockdown. The debts related to coronavirus shall be excluded from defaults under IBC. Also, the minimum threshold to initiate insolvency proceedings has been raised to Rs 1 crore from Rs 1 lakh. Moreover, no fresh insolvency proceeding will be initiated up to one year.