Bank Nifty Hits Record High, Surpasses 57,000 Mark Fuelled by RBI’s CRR Cut

On Monday, the Bank Nifty index reached an all-time high, crossing the 57,000 threshold for the first time in its history. The index peaked at 57,049.50, driven by a robust rally in banking stocks. This surge was primarily fueled by the Reserve Bank of India’s (RBI) decision to cut the Cash Reserve Ratio (CRR), injecting fresh liquidity into the banking system.

At 9:30 am, the Bank Nifty index was trading at 56,828.75, up 0.44% or approximately 250 points, slightly retreating from its earlier peak above 57,000. Continuing the gaining trend, Nifty Bank was trading at 56,977.70, up 0.71% at 12:35 PM.

Among the leading gainers were Kotak Mahindra Bank, Canara Bank, and IDFC First Bank, which rallied between 1.5% and 2.5%.

Also Read: Sensex Opens Higher on June 9; Bajaj Finance, Kotak Mahindra & More Surge

Key Factors Behind the Surge in Bank Nifty Indices

Strong Gains Across PSU and Private Bank Indices

Both the PSU Bank and Private Sector Bank indices recorded significant upward movements during trading. Key constituents such as Kotak Mahindra Bank, AU Small Finance Bank, Canara Bank, Axis Bank, and Punjab National Bank led the gains, appreciating between 1% and 2%. However, ICICI Bank was the notable exception, with its shares declining amid the positive market momentum.

RBI’s CRR Cut Boosts Liquidity and Banking Sector

The surge in banking stocks followed the RBI’s reduction of the CRR by 100 basis points, lowering it to 3% of net demand and time liabilities (NDTL). This move is estimated to release ₹2.5 lakh crore of primary liquidity into the banking system, easing the cost of funds for banks and enhancing the speed of monetary policy transmission.

Ongoing Liquidity Support Through RBI’s OMOs

In addition to the CRR cut, the RBI has infused more than ₹7 lakh crore into the banking system over the last five months through Open Market Operations (OMOs). These continued liquidity measures aim to support credit growth and stabilise the financial markets amid evolving economic conditions.

Sectoral Index Movements: Private and PSU Banks

The Nifty Private Bank index rose by 80 basis points to 28,067.95, with RBL Bank, Kotak Mahindra Bank, and Bandhan Bank among the top performers. Meanwhile, the Nifty PSU Bank index led sectoral gains, climbing 1.2% in early trading. UCO Bank, Bank of Maharashtra, and Indian Overseas Bank posted robust gains ranging from 3% to 4%.

Monetary Policy Easing Expectations and Surprises

Market experts had anticipated a repo rate cut of 100-125 basis points during the ongoing monetary easing cycle. The RBI’s early and frontloaded rate cuts aligned with these forecasts. However, the unexpected surprise came in the form of a significant CRR reduction, which further enhanced liquidity and reinforced the central bank’s commitment to supporting economic growth.

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