The banking stocks are expected to stay suppressed for some more times to come. This fact has been bolstered by the asset liability mismatch, which some of the prominent public sector banks had been revealing these days. With the advent of the monetary policy disclosed by the RBI initiating its move to hike the repo rate and the reverse repo rate to curb the inflationary pressure seems to have been worsening the situations of these banks especially when they are already reeling under the asset liability mismatch.Recently only, the RBI have increased the repo rate and reverse repo rate by 25bps. Repo rate is the rate at which the central bank lends to the commercial banks and the reverse repo rate is the rate at which the commercial banks lend to t fiat currency he central bank. However, the central banks are trying hard to suppress the inflationary pressure in the economy, but this is just one facet of it. Increase in the rates would lead to the interest rate hike thereby leading to the rise in the cost of funds, hence dampening the credit growth rate in the economy. Banks are already bearing the brunt of their balance sheets overburdened with the NPA’s( Non performing Assets), rise in the rate of interest( however short term it may be) would lead to more liquidity crunch with the banks. The annual reports of the Punjab National Bank states that the asset liability mismatch is already resorting at 54% and when it crosses 60%, the bank would be brought under the ambit of the acute financial crunch with it.