Banks ranging from Bank of Baroda, Central bank of India, PNB, along with private lenders like IndusInd Bank and Kotak Mahindra Bank are some names that could see an impact on their CET-1 Ratio and their Net Worth, owing to the latest norms issued by the Reserve Bank of India on Expected Credit Loss, according to brokerage firm Nomura’s latest note.
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1 / 9Banks ranging from Bank of Baroda, Central bank of India, PNB, along with private lenders like IndusInd Bank and Kotak Mahindra Bank are some names that could see an impact on their CET-1 Ratio and their Net Worth, owing to the latest norms issued by the Reserve Bank of India on Expected Credit Loss, according to brokerage firm Nomura’s latest note.
2 / 9The norms, which take effect from April 1, 2027, will have a three-stage provisioning model. While Macquarie sees a very small impact on private banks, the credit costs for PSU Banks could rise by 20 to 25 basis points as a result of these norms.
3 / 9According to Nomura, higher upfront provisioning will be required in unsecured retail, MSME and crop exposures with PSU Banks likely to face a drag between 55 to 130 basis points on their CET-1 and a 3% to 9% erosion of their net worth. On the flip side, private banks like HDFC Bank, ICICI Bank and Axis Bank hold sufficient buffers and are hence insulated. Here’s a look at the banks that are likely to be impacted:
4 / 9Bank of Baroda | According to Nomura, the latest RBI norms will impact the lender’s CET-1 ratio by 65 basis points and its net worth by 4.2%. The stock is up 9% so far in the month of April.
5 / 9Central Bank of India | The state-run lender’s CET-1 ratio is likely to be impacted by 124 basis points due to the RBI norms, according to Nomura, with an 8.8% hit seen to its net worth as well. The stock is up 16% so far this month.
6 / 9PNB | The latest RBI norms could impact the lender’s CET-1 ratio by 108 basis points and its net worth by 6.7%, Nomura’s note said. The stock is up 12% so far in the month of April.
7 / 9Union Bank | The lender’s CET-1 ratio is likely to be impacted by 56 basis points and its net worth may be hit by 3.3% due to the new RBI norms, according to Nomura. The stock is the worst performing PSU Bank stock in the month of April, gaining only 5% this month.
8 / 9IndusInd Bank | IndusInd is one among the two private banks who could be impacted due to these norms, according to Nomura, who added that the CET-1 ratio for the lender may be impacted by 128 basis points, while its net worth could seen an impact of 7.7%.
9 / 9Kotak Mahindra Bank | The other private lender likely to be impacted by the new RBI norms is Kotak Mahindra Bank, as Nomura sees a 35 basis point impact to the lender’s CET-1 ratio and a 2% impact to its net worth.
