Bank stocks tumble as RBI forex clampdown looms.

Bank stocks tumble as RBI forex clampdown looms. Indian banking stocks plunged up to 3% Monday as investors feared the Reserve Bank's emergency forex restrictions could trigger mark-to-market losses exceeding Rs 4,000 crore this quarter. Nifty Bank fell 2.5%, with major private lenders Axis, Kotak, and IndusInd dropping 3% each, while ICICI, HDFC Bank and SBI declined around 2%. The RBI's new directive caps banks' net open forex positions at $100 million effective April 10, forcing lenders to unwind massive arbitrage trades estimated at $25-50 billion. Analysts warn that unwinding these positions could generate substantial MTM losses when the rupee moves against the dollar. Banks are now lobbying the RBI for relief, seeking grandfathering of existing contracts and extended timelines to reduce market disruption and profit impact in the fourth quarter.