Shares of banking stocks such as SBI, Bank of Baroda and Axis Bank fell up to 2 per cent intraday in trade on Monday after government picked RBI deputy governor Urjit Patel as the next governor to succeed Raghuram Rajan.
Bank Nifty recovered some losses to end 0.43 per cent down to 19,330.25 level. PSU Bank index was the second biggest sectoral loser on NSE, down 1.12 per cent with SBI leading the losses, down 1.68 per cent on NSE.
Data available with database AceEquity showed the bad loans of PSU banks soared to about Rs 5,71,500 crore by June 30 from Rs 2,85,750 odd crore as of March 13. Private banks were also under pressure with 68 per cent rise in gross NPAs from Rs 34,805 crore last year to Rs 58,331 crore this year.
Experts believe Patel, seen by markets as being more hawkish, would continue Rajan's drive to clean up banks.
He will start his three-year term as governor after Rajan demits office on September 4.