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Public sector banks' stocks push Sensex, Nifty higher after FinMin clears proposal for infusion of Rs 7,577 crore in six lenders

Punjab National Bank (4.02%), Bank of Baroda (3.99%), SBI (1.96%) and IndusInd Bank (0.77%) were the top gainers on the BSE Bankex . PNB (4.05%), Bank of Baroda (3.96%), Canara Bank (2.69%) and SBI (1.95%) were the gainers on Bank Nifty.

twitter-logo BusinessToday.in        Last Updated: January 5, 2018  | 09:17 IST
Public sector banks' stocks push Sensex, Nifty higher after FinMin clears proposal for infusion of Rs 7,577 crore in six lenders

Public sector bank stocks led the rise on Sensex and Nifty on Thursday with the finance ministry clearing proposal for infusion of Rs 7,577 crore in six weak public sector banks (PSBs) as part of the recapitalisation plan to bolster capital adequacy ratio.

While the Bank Nifty rose 0.33% or 130.20 points to 25448 level, BSE Bankex closed 144 points or 0.51 percent higher to 28,777 level. PNB (5.97%), Bank of Baroda (3.77%) and SBI (1.72%) were the top bankex gainers.  PNB (3.48%), Bank of Baroda (3.01%) and Canara Bank (2.25%) were the top bank Nifty gainers.

Finance Minister Arun Jaitley in October announced an unprecedented Rs 2.11 lakh crore two-year road map to strengthen PSBs, reeling under high non-performing assets (NPAs) or bad loans. Their NPAs have increased to Rs 7.33 lakh crore as of June 2017, from Rs 2.75 lakh crore in March 2015.

The plan includes floating re-capitalisation bonds of Rs 1.35 lakh crore and raising Rs 58,000 crore from the market by diluting government  stake.

The government is working on the modalities for issuing the recapitalisation bonds as it aims to front-load the infusion with an aim to strengthen the state-owned banking sector, sources said, adding that the announcement in this respect, including detailed guidelines, will be made during this month.

Jaitley had also announced that banks would get about Rs 18,000 crore under the Indradhanush plan over the next two years.

Under the Indradhanush road map announced in 2015, the government had announced infusion of Rs 70,000 crore in state- owned banks over four years, while they will have to raise a further Rs 1.1 lakh crore from the market to meet their capital requirement in line with global risk norms, known as Basel-III.

In the last three-and-a-half years, the government pumped Rs 51,858 crore capital in the PSBs. The remaining Rs 18,142 crore will be injected into the banks over the next two years.

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