Bank Nifty Reverses Early Gains To Fall Over 400 Points As RBI’s Liquidity Measures And Three-Year High Bond Yields Weigh On Banks
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The Nifty Bank index fell nearly 470 points, or 0.85%, to 54,786.20 in morning trade on 12 October 2026. SBI, PNB, and ICICI Bank were among the major losers.
The Nifty Bank share price benchmark retreated despite the rupee strengthening nearly 1% against the US dollar following the Reserve Bank of India’s (RBI) weekend announcements.
The RBI’s press release on its liquidity measures included plans to increase banks’ minimum daily cash reserve ratio (CRR) maintenance and a special dollar window for three public-sector oil marketing companies.
These developments added to concerns about liquidity available within the banking system.
At 11:37 am, the Nifty Bank share index was at 54,786.20, down 470.46 points or 0.85%.
Nifty Bank Share Price Reverses Gains
On 12 October 2026, the Nifty Bank index opened at 55,350.15. The index reached an intraday high of 55,416.45 before declining by 197 points or 0.36% to 55,059.50 in the morning trade.
The RBI plans to sell government bonds worth ₹25,000 crore on Tuesday, a move expected to absorb liquidity. The minimum daily CRR maintenance requirement will also rise from 90% to 99% from the fortnight beginning 16 October 2026.
The RBI’s special dollar window for Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) forms part of its broader efforts to support the rupee. Foreign exchange operations could also affect rupee liquidity.
Bond Yields Hit A Three-Year High
The benchmark 10-year government bond yield climbed to 7.3707% on 12 October, compared with 7.2994% on the previous Friday. It has risen for eight consecutive weeks, gaining 54 basis points (bps) over that period.
Higher yields push bond prices lower, potentially exposing banks to mark-to-market losses on their government securities portfolios. Tighter liquidity could also increase funding costs and put pressure on treasury profitability. These concerns added another headwind for the Bank Nifty share price benchmark.
SBI, PNB And ICICI Bank Lead The Decline
On the Bombay Stock Exchange (BSE) at 11:26 am on 12 October 2026:
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State Bank of India (SBI) shares fell 1.94% to ₹939.55.
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Punjab National Bank (PNB) declined 1.41% to ₹115.15
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ICICI Bank slipped 1.26% to ₹1337.
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Axis Bank lost 0.92% to ₹1247.45.
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HDFC Bank declined 0.25% to ₹705.35.
Yes Bank, Canara Bank, Union Bank of India and Bank of Baroda also traded lower.
Among the gainers, IDFC First Bank rose 0.03% to ₹440.25.
This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
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