The Hindu Business Line : `Equity market can be good revenue source for banks'

DESPITE the enhanced capital market exposure norms for some banks from five per cent to 10 per cent on a case-by-case basis, the response from the banking industry to the stock markets have been muted.

"Banks have not necessarily been major players in the equity markets. But for a few exceptions like ICICI Bank, most of them have not utilised anywhere near the upper five per cent exposure limit in capital market," said Mr K.P. Padmakumar, Chairman of Equity Intelligence, a portfolio management company.

In the background of the falling interest rate regime, plunge in treasury profits and large write-backs to the held-to-maturity accounts, it is high time that the banks viewed capital markets as an emerging avenue to shore up their bottom line, Mr Padmakumar, who was earlier the Chairman of Federal Bank, said.

Given the favourable forecasts for the industrial sector during the remaining part of the year, the surge in funds from banks and pension funds will also be timely for the capital markets. The scrips are likely to get better valuation and yield better returns to the investing banks. It was also time that the overt dependence on FII funds which constitute as much as 80 per cent of the funds in the stock market was brought down, Mr Padmakumar said.

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`Equity market can be good revenue source for banks'