Fears that the measures may not be withdrawn anytime soon owing to the persistent fall in the rupee also affected sentiments.
Sahres in India's largest private sector banking name, ICICI Bank hit a fresh 52-week low of Rs 832 on the National Stock exchange, while the nation's largest bank, State Bank of India saw its share price fall to a 52-week low Rs 1526 on the NSE.
Yes Bank, another blue chip private sector bank saw its share price hit a new 52-week low of Rs 244.30. Joining the list was IDBI Bank, Central Bank, Union Bank, Bank of India, Punjab and Sind Bank and Dena Bank.
Banking stocks have been badly hit following the recent RBI measures to tighten liquidity in order to prevent a fall in the rupee.
It may be recalled that the RBI hiked the MSF requirement for banks. Under the MSF banks were borrowing from the RBI at repo rate, plus 1 per cent, which effectively meant 8.25 per cent. But, with effect from July 17, banks have to borrow at 10.25 per cent, which is a good 2 per cent over and above the existing rates.
In other significant move the RBI also fixed the limit for borrowing at 1% of the of the Net Demand and Time Liabilities (NDTL) of the banking system, reckoned as Rs.75,000 crore for this purpose. The allocation to individual banks will be made in proportion to their bids, subject to the overall ceiling, the RBI had said.