The Banking Sector Funds

There are 6 Open End MF schemes and 4 ETFs in this space as on 17.05.2010. Most of them landed in the fray in 2007 & 2008 expecting the action of level playing field for Indian & Foreign Banks.

The Open End Funds are:

1. ICICI Prudentail Banking & Financial services Fund(Aug 2008)
2. J M Fianancial Services Sector Fund(Nov 2006)
3. Reliance Banking Fund(May 2003)
4. Religare Banking Fund( June 2008)
5. Sahara Banking & Financial Services Opportunities Fund(May 2008)
6. UTI Banking Sector Fund(April 2004)

The ETFs are also open ended but they are available for trade through the Stock Exchanges in the listed category just like you buy & sell shares. This is different from the broker channel for purchase of normal MF units.

The following are the ETFs :

1. Banking BeES(May 2004)
2. Kotak PSU Bank ETF(November 2007)
3. PSU Bank BeES (October 2007)
4. Reliance BAnking ETF(May 2008)

The propects for Indian Banks appear to be good with the policy supports from RBI & Govt from time to time. The question of level playing field itself got postponed in the wake of happenings in October 2008.The relaxations in provisioning of NPAs have now figured in their annual reports. This has in fact created accumulated NPAs Further the relaxations in provisioning for infrastructural advances will keep at bay the mounting NPAs of real estate segment figuring in the annual reports.

Slippages are costly.Too costly in a down turn. CARE is catious on Indian Banking sector in their Report dated 31 December 2009. But India has a good domestic demand and not fully dependent on Europen demand. So the institutional supports may give a breathing to the sector to pick up without breaking down.

The Sensex fall started early May 2010 is continuing in tandem with the global markets.

The stringent norms of capital adequacy followed by RBI has kept our banking system from being carried away in the October 2008 shakeout. Once tested, let us hope the regulators will look at loopholes to see the system is not crumbling.

For investors with deep pockets, these are good buy; Others who already in the funds may hold on till the results of GOI & RBI gets reflected in the annual reports triggering a value appreciation in these stocks.

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