Bank of Baroda has relatively better position on impaired assets.
At least two public sector banks Union Bank of India and Indian Overseas Bank have quietly increased interest rates on short-term deposits to raise resources and manage asset-liability mismatch. Union Bank has announced a special deposit scheme for 400 days, which offers 9 per cent interest. The scheme was launched much before the announcement of the monetary policy. Chennai-based Indian Overseas Bank has also raised rates for large deposits.
Amid stiff competition from private and foreign players, the country's 27 public sector banks logged 35 per cent growth in profit at Rs 16,546 crore (Rs 165.46 billion) while their bad assets fell below 3 per cent during 2003-04.
Jaitley said there was a need for the banking sector to fund infrastructure and manufacturing sectors to support the ambitions of higher growth.
Anup Roy and Krishna Kant on the challenges the public sector banks face in revitalising themselves
In May, MFs were the net sellers in several PSUs, as they deployed Rs 47,600 crore in equities during the month.
The government has said that public sector banks have asked for much more capital than it can give.
The move comes even as Bank of India on Wednesday said its corporate clients will suffer mark-to-market losses of around Rs 125 crore. It has 34 clients with 74 derivative transactions. Last week, State Bank of India said its clients may incur MTM losses of up to Rs 700 crore at the end of March 2008.
A host of public sector banks had cut interest rates in the earlier part of this year following an advisory from Finance Minister P Chidambaram in January. Private and smaller state-owned banks, however, did not cut rates.
In a move that is likely to attract political controversy, the committee on financial sector assessment has recommended that the banking sector should be gradually opened to foreign players and that the government lower its shareholding in public sector banks below 51 per cent and allow state-owned players to merge if the Centre's stake cannot go below the prescribed lower limit.
The move to make the appointment process more robust comes after last month's arrest of S K Jain, chairman and managing director of Syndicate Bank last month, over graft charges.
'It's advisable not to go overboard on a banking sector fund or any other sector fund.'
'Maintain a balanced approach with a preference for short-to medium-duration funds.'
Banks, including country's largest lender State Bank of India, have informed the customers well in advance about the likely inconvenience due to strike.
SBI remains a favourite of most brokerages in the PSB segment.
The current employee strength of all state-run banks is about 672,000.
Notwithstanding the recent sharp decline in the stocks of public sector companies, analysts at Jefferies remain bullish on this segment. State Bank of India, Coal India, and NTPC are their top picks in this space, they said in a recent note. The public sector undertaking (PSU) or state-owned enterprise (SOE) index, with a 70-percentage-point outperformance versus the National Stock Exchange Nifty50 over the past 12 months, comes after a decade of underperformance before 2020.
However, the likely impact of strike may not be much excluding few areas, said SBI.
Amid strong opposition from CIL workers union to the proposed stake sale in the company, Finance Minister P Chidambaram has said the disinvestment proceeds of about Rs 20,000 crore (Rs 200 billion) from the coal behemoth will be invested in public sector banks.
Sensex catapults 1,241 points and Nifty vaults 382 points in two sessions in a row.
FDI rules announced last year changed the criteria of calculating these investments and included American depository receipts, global depository receipts and convertible shares also in that category.
In eight cases, the banks would violate the minimum public shareholding norms if their promoter, the Government of India, infused capital as announced.
Air India is understood be in negotiations with state-run banks to avail working capital loans at low interests.
"I'm taking a minute to respond... I do respect Raghuram Rajan as a great scholar who chose to be in the central bank in India at a time when the Indian economy was all buoyant," Sitharaman said during the lecture organised by the Deepak and Neera Raj Centre on Indian Economic Policies of the Columbia University.
The minister said RBI maintains a list of non-suit filed borrowers of banks and financial institutions, while CIBIL had a database on suit-filed accounts of Rs 1 crore (Rs 10 million) and above.
Jaitley said the government had earmarked Rs 25,000 crore (Rs 250 billion) for recapitalisation.
A section of analysts feel now may not be a bad time to buy select PSBs.
Report points out corporate vulnerability indicators remain elevated.
IBA has commissioned a study to evaluate the pros and cons of keeping banks shut on Saturdays.
The current process for selecting auditors could compromise their "independence".
The last year has seen public sector undertakings (PSUs) outperforming the Nifty50, albeit by a small degree. But PSU valuations are still, on average, less than half of private sector peers at price-to-equity or PE 8.7x for the Nifty PSU Index versus 20.9x for the Nifty50. There are several reasons for lower valuation.
"If IBA does not come out with a solution with regard to our demands within given time-frame of three months ending on May 31, then we will be left with no option but to again adopt agitational path. And this time, we will observe indefinite strike," All India Bank Officers' Confederation (a member of United Forum of Bank Unions) General Secretary Amar Pal said in Chandigarh on Monday during the 8th Triennial General Council meeting.
The Reserve Bank of India's (RBI's) $10 billion US dollar-rupee buy-sell swap auction for three years received bids worth $16.23 billion on Friday, reflecting robust demand amid persistent liquidity deficit in the banking system. This was the second swap auction by the central bank after it infused $5 billion via six month-swap on January 31.
Capital needs are likely to increase substantially each year.
At present, 58 per cent of the population has bank account.
The posts of Chairman and MD in the private sector are held separately.
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