India’s bank stocks pop after the central bank boosts lending to prop up the virus-hit economy

Indian banking shares jumped on Wednesday after the central bank introduced measures to boost lending as the coronavirus crisis continues to take its toll on the country.

The Nifty Bank index was up 1.35% while the Nifty PSU index — which captures the performance of India’s public sector banks — rose 1.8%. They outperformed the benchmark Nifty 50, which was up only 0.7%.

Shares of major lenders jumped after the announcement and have since given up some gains. Bank of Baroda was trading 2.63% higher, IndusInd Bank added 2.51%, HDFC Bank gained 1.47%, Axis Bank was up more than 2% while the State Bank of India advanced 1.28%.

RBI announces measures to facilitate lending
The Reserve Bank of India will monitor the economic impact of India’s second wave of Covid-19 infections and deploy all resources possible to ease the economic stress, governor Shaktikanta Das said on Wednesday during an unscheduled speech.

His announcement came as India crossed another grim milestone on Wednesday. Coronavirus deaths rose by a record 3,780 in the last 24 hours, with total reported fatalities over 226,000, according to the latest data from the health ministry. On Tuesday, India became the second country after the United States to cross 20 million reported cases.

He announced plans to inject 500 billion rupees ($6.78 billion) of liquidity to ease access to emergency health services. The move would allow commercial banks to borrow money from the central bank through repurchase agreements, or repos, and lend it out to Covid-19-related businesses.

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