EVEN as foreign institutional investors (FIIs) have made a killing in the stock market in the past two years, multinational banks, on the other hand, have been cautious at their equity desks. In contrast, Indian banks, both private sector and public sector banks, have higher direct exposure to stocks. Public sector banks — nationalised banks and the State Bank group — have started turning to stocks ever since the interest rate scenario turned southward in the past three years which made bond investment unremunerative. According to the latest bank-wise figures released by the Reserve Bank of India in its Statistical Tables Relating to Banks in India, total bank investments in stocks by the country’s commercial banks rose by 36% in FY07 from Rs 11,028.64 crore to Rs 15,001.88 crore. While the Sensex rose 18% during the period from 11,279 in end-March ’06 to 13,384 in end-March ’07. But within bank groups, nationalised banks (with the highest direct investments at Rs 9,398 crore as of March ’07) as well as the State Bank group hiked their exposure by more than 50% during the period. Allahabad Bank (104%) followed by Syndicate Bank (85%) and Canara Bank ( 78%) recorded among the highest growth in their equity investment, though the absolute size of investments for individual banks vary. While private banks, including new generation and old private sector banks, have hiked their investments in stocks by only 1.5%. This is largely because banks with high exposure in equities in this group have either gone slow or recorded a dip in investments. ICICI Bank, which accounts for 65% of stock investment by private sector banks, has reduced its exposure to stocks. Though many small-sized banks, including some older ones, have substantially hiked their investments in stocks during the year. Foreign banks, which are known to have aggressive treasury desks compared with public sector banks, seem to be cautious in equity investments