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HDFC Bank, ICICI Bank, SBI and other banking stocks fall up to 4% as RBI tightens Forex rules
3 min read | Updated on March 30, 2026, 11:23 IST
SUMMARY
HDFC Bank, ICICI Bank and other leading banks saw a sharp decline after the RBI capped the open positions in the onshore currency market at $100 million. This move could force banks to unwind their large positions, leading to immediate dollar selling and short-term support for the rupee.
The onshore currency market is a regulated market where the Indian Rupee is traded against foreign currencies. | Image: Shutterstock
HDFC Bank, ICICI Bank, Axis Bank, SBI and other banking stocks saw a sharp decline following market opening on Monday, March 30 2026. Meanwhile, the NIFTY Bank index was trading 2.6% lower.
Shares of both private and public banks saw high volatility after the Reserve Bank of India capped the open positions that banks can hold in the onshore currency market at $100 million at the end of each trading day.
| Stock name | Intraday fall | 1-year return* |
|---|---|---|
| HDFC Bank | 2.3% | -18.40% |
| ICICI Bank | 2.2% | -9.73% |
| State Bank of India | 2.7% | +28.57% |
| Axis Bank | 4.2% | +5.08% |
| Kotak Mahindra Bank | 3.9% | -18.79% |
| IndusInd Bank | 4.0% | +17.04% |
| Union Bank of India | 4.0% | +33.59% |
| Canara Bank | 3.6% | +41.30% |
| Bank of Baroda | 3.6% | +10.1% |
| Punjab National Bank | 3.2% | +6.08% |
The new rules will come into effect from April 10 and is expected to force banks to unwind their large positions and curb one-sided bets against the rupee. RBI announced this move on Friday, March 27, to curb speculative bets against the currency.
Why do banks use the onshore currency market?
The onshore currency market is a regulated market where the Indian Rupee is traded against foreign currencies within domestic boundaries, overseen by the Reserve Bank of India (RBI). This mechanism is generally used for import/export transactions, hedging, and managing arbitrage between the onshore and offshore (NDF) markets.
Banks generally have held large open positions in the onshore market, with most of them matched by open positions in the offshore (Non-Deliverable Forwards) market.
Experts believe the RBI's new step will effectively force banks to unwind large long-dollar positions, with estimates suggesting that $10–18 billion of positions could be squared off in the near term, leading to immediate dollar selling and short-term support for the rupee.
Following the RBI cap on the onshore currency market, banks are expected to cut their positions. As a result, the rupee recovered 128 paise from its all-time low to 93.57 against the US dollar in early trade on Monday.
Meanwhile, banks have requested the central bank to extend the implementation timeline, as many banks have huge positions in the onshore currency market, which they may not be able to square up immediately.
Since many domestic banks have huge positions in the onshore currency market. Hence, any position square-off could result in losses for the banks. As per the global investment firm Jefferies, mark-to-market losses for banks could be worth between ₹3,000 crore and ₹4,000 crore.
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