Loan moratorium announcement by RBI and its impact on the banking stocks listed in the Bank nifty index has been explored in this study. The RBI announced a 3-month loan moratorium to ease the repayment of loans EMI’s by the borrowers affected by the COVID-19 pandemic. This announcement is treated as the event for this study, based on the hypothesis that it may have influenced banking stock returns during such period. The study employs an event study methodology with a 41-day event window, encompassing 20 days before and 20 days after the announcement of the moratorium. This research is among the few studies that utilizes the event study methodology within the context of the Indian stock market to assess the impact of loan moratorium news on bank stock prices. The findings of the study indicate potential reaction on the stock returns after RBI's announcement on moratorium alongside 3-week lockdown announcement. The normal behaviour of the stock was observed to be disrupted by moratorium and lockdown. The findings of the study provide valuable insights into the market's response to significant economic policies and measures taken during crises. This study will enable policymakers in future decision-making and implementation and help investors in drawing strategy to trade during such events round the corner.

Berlinger, E., Kiss, H. J., & Khayouti, S. (2022). Loan forbearance takeup in the Covid-era - The role of time preferences and locus of control. Finance Research Letters, 50(May). https://doi.org/10.1016/j.frl.2022.103250

Bhattacharjee, A., Kumari, M., & Das, J. (2020). Investigating the Impact of the Announcement of Loan Moratorium on Stock Prices: Evidence from Indian Public Sector Banks. Jindal Journal of Business Research, 9(2), 106–116. https://doi.org/10.1177/2278682120969014

Demirgüç-Kunt, A., Pedraza, A., & Ruiz-Ortega, C. (2021). Banking sector performance during the COVID-19 crisis. Journal of Banking and Finance, 133(xxxx). https://doi.org/10.1016/j.jbankfin.2021.106305

Efanga, U. O., Etim, R. S., & Zwingina, C. T. (2021). An Event Study Approach to Evaluating the Impact of Coronavirus Information Spread on Commercial Banks’ Stock Returns in Nigeria. Global Academic Journal of Economics and Business, 3(1), 1–9. https://doi.org/10.36348/gajeb.2021.v03i01.001

Fama, E. F. (1970). Efficient Market Hypothesis: A Review of Theory and Empirical Work. In The Journal of Finance (Vol. 25, Issue 2, pp. 383–417). https://doi.org/https://doi.org/10.7208/9780226426983-007

Kumar Digal, S., Khatun, Y., & Sundar Seet, B. (2020). COVID-19 Impact on Nifty Banks: An Event Study Methodology. Journal of International Business and Economy, 22(1), 83–108. https://doi.org/10.51240/jibe.2021.1.4

Mehta, M., & Kaul, R. (2020). Loan Moratorium 2020- Its Impact on Indian Banks. Australian Finance & Banking Review, 4(2), 1–14. https://doi.org/10.46281/afbr.v4i2.919

Philippatos, G. C., & Viswanathan, K. G. (1991). Brazilian debt crisis and financial markets: An analysis of major economic events leading to the Brazilian debt moratorium. Applied Financial Economics, 1(4), 223–234. https://doi.org/10.1080/758522006

Verma, R. K., Kumar, A., & Bansal, R. (2021). Impact of COVID-19 on Different Sectors of the Economy Using Event Study Method: An Indian Perspective. Journal of Asia-Pacific Business, 22(2), 109–120. https://doi.org/10.1080/10599231.2021.1905492

Zhang, Z. (2001). The impact of IMF term loans on US bank creditors’ equity values: An event study of South Korea’s case. Journal of International Financial Markets, Institutions and Money, 11(3–4), 363–394. https://doi.org/10.1016/S1042-4431(01)00044-0