Banking shares fell sharply in trade with the Nifty PSU Bankex seeing a cut of nearly 2 per cent and the Bank Nifty seeing a cut of 1 per cent, following worries over new lending norms that are to come into force.
Bank of India, Punjab National Bank and State Bank of India were the biggest losers in trade with their stocks seeing fall of more than 2 per cent each.
Private sector lenders also saw their share prices falling with ICICI Bank and Axis Bank among the big losers.
However, HDFC Bank and IndusInd Bank managed to stay steady as investors believed that these would be banks that would see the least impact on net interest margins.
The new norms do not come at a good time for banks, which have been saddled with bad debts. Unless a recovery takes place in the economy and the new Bankruptcy Bill is approved by parliament, the banking sector would continue to be plagued by NPA worries.