Small to mid-sized private banks rally on hopes they could become acquisition targets for foreign banks. The RBI on Tuesday said it will treat foreign banks operating in the country on nearly equal terms with local lenders should they move to a wholly owned subsidiary structure.
Foreign banks would only be allowed to buy a local private-sector lender after a review of the overall extent of foreign bank penetration, the central bank said in the release.
Lakshmi Vilas Bank Ltd gains 6.3 per cent, Development Credit Bank Ltd rises 4.8 per cent, Karnataka Bank Ltd is up 6.2 per cent, Dhanlaxmi Bank is 3.9 per cent higher while City Union Bank gains 2.5 per cent.
However, large private banks edge down on profit-taking after a recent rally.
The Sensex is trading up 0.2 per cent after a flat start. Traders expect the index to continue seeing some consolidation in the near-term.