Banking stocks witnessed broad-based buying on June 9 after the Reserve Bank of India (RBI) introduced a concessional foreign exchange swap facility designed to support overseas fundraising by banks and public sector enterprises (PSEs).

The Bank Nifty index advanced more than 1%, with all 14 constituent stocks trading in the green during morning trade. Investors responded positively to the RBI's initiative, which is expected to lower hedging costs for eligible overseas borrowings and improve access to foreign capital.

Under the facility, banks will be able to access foreign exchange liquidity through RBI swap arrangements at concessional rates, making overseas funding more attractive. The measure is aimed at facilitating capital raising by financial institutions and state-owned enterprises while ensuring adequate foreign currency liquidity in the domestic financial system.

The announcement led to gains across both private and public sector banking stocks, as market participants expect the scheme to support credit growth, strengthen funding flexibility, and reduce borrowing costs for eligible institutions. Public sector banks were among the key beneficiaries, given their significant role in financing infrastructure and government-backed projects.

The RBI's move comes at a time when Indian lenders are exploring diversified funding sources to support growing credit demand. By easing the cost of raising funds abroad, the central bank aims to improve liquidity conditions and support broader economic growth.

Market participants will closely monitor the utilization of the facility and its impact on banking sector funding costs in the coming months. The positive market reaction highlights investor confidence that the measure could enhance the sector's balance-sheet strength and funding capabilities.