The combined market capitalisation of the 21 listed PSU banks declined by about Rs 76,000 crore to Rs 425,800 crore during the month.
PSU bank stocks are witnessing hectic activity these days and are now among the top traded stocks on the bourses.
Even as concerns over PSU Banks' asset quality and growth rates remain, there are few that offer a favourable risk-reward equation.
The performance of banking and information technology (IT) stocks has had a significant impact on the composition of diversified mutual fund (MF) portfolios. Over the past two months, these sectors have become increasingly dominant, now constituting nearly 30 per cent of the total allocation in many diversified MF portfolios.
The government on Tuesday gave greater autonomy to state-run banks, allowing them make domestic and overseas acquisitions without its approval.
Analysts say there is still no visibility of earnings improvement.
Shares of state-owned bank stocks were under pressure on Monday due to muted deposit and credit growth numbers reported by these lenders in the October-December quarter (Q3) of 2024-25 (FY25). The Nifty PSU Bank index was down 4 per cent, with Union Bank of India emerging as the biggest loser as its shares fell 7.5 per cent to close at Rs 114.7, followed by a 5.7 per cent drop in shares of Bank of Baroda (BoB) to Rs 228 and a 4.7 per cent slide in shares of Bank of India to Rs 99.8 on the National Stock Exchange.
This is the first tranche of capital infusion for the fiscal and more funds would be provided in future depending upon the performance of PSU banks.
To boost the economy, the RBI has taken a slew of measures since September last year, including cuts in the cash reserve ratio and short-term lending (repo) rate, to inject funds into the system and signalled a soft interest rate regime. PSU bankers' meeting is being held in the backdrop of the third quarterly review of monetary policy by the Reserve Bank of India.
The overall debt servicing metrics of Indian corporates are weak.
'I would say restore the banks to health, get active board composed of professionals, then there will be an ideal situation for merger.'
As of June, the gross NPA of nationalised banks was 3.89 per cent and State Bank Group at 5.50 per cent.
Hemendra Hazari of Karvy Stock Broking believes that government banks will be impacted by rising bond yield because they have a much higher proportion of investments and their durations are higher too.
After the finance minister directed public sector banks to join the account aggregator (AA) ecosystem, 5-6 major ones, including State Bank of India (SBI) and Bank of Baroda are expected to go live by July-end. Sahmati, an industry alliance for the AA ecosystem, has been working with PSU banks to get them onboarded for quite some time now. So far, Union Bank of India and Punjab National Bank (PNB) have gone live on the AA ecosystem. While Union Bank has been live for a while, PNB went live earlier this month.
Subbarao also warned of attrition in PSBs, saying, "PSBs will lose talent to the private sector."
The finance ministry is considering a proposal by Indian Bank's Association to give post allowance to chairmen and executive directors of public sector banks, a key official said on Tuesday.
The rally followed the govt's plan to bolster state-owned lenders.
A section of the public sector banking employees will go on two-day all-India strike from Wednesday to protest against financial sector reforms and outsourcing of jobs.
The Finance Ministry has called a meeting of heads of public sector banks to clear stalled projects.
PNB reported the maximum number of such frauds.
The central government is looking to strengthen the boards of public sector banks (PSBs) by specifying terms of office and conditions of service for whole-time directors, and also seeking disclosures from all directors about interests in other companies. Through the Banking Laws Amendment Bill, the government is likely to introduce conditions for disqualification of whole-time and independent directors which are not specified in the current legislation. The Centre is seeking to introduce fresh changes that are aimed at strengthening the boards of PSBs, and holding their directors accountable, an official said.
The re-invention that PSU banks have undergone recently is a great story.
The decision to increase the quantum of capital infusion was taken at a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram in New Delhi.
Tata Motors was the biggest gainer in the Sensex pack, rallying 2.94 per cent. It was followed by Vedanta, Bajaj Finance, Sun Pharma, ONGC, ICICI Bank, Bajaj Auto, Tata Steel, RIL, HDFC duo, L&T and SBI, rising up to 2.78 per cent.
These PSU banks also account for the lion's share of bad loans or NPAs plaguing the sector and need crores of rupees in new capital in the next two years to meet global Basel III capital norms.
Finance Minister Nirmala Sitharaman on Tuesday held a review meeting on credit guarantee scheme with heads of public sector banks, and asked them to expedite loan disbursement under the Rs 3-lakh crore ECLGS for MSME sector, hit hard by coronavirus-induced lockdown. The meeting on Emergency Credit Line Guarantee Scheme (ECLGS) was held through video conference, and the minister appreciated the efforts of banks in execution of the scheme.
A major reshuffle of top executives in 11 PSU banks is on the cards with the chairmen of Allahabad Bank, Corporation Bank, Syndicate Bank, Union Bank of India and Vijaya Bank slated to retire between March-July 2006.
Benchmark equity indices Sensex and Nifty slumped over 1 per cent on Friday, tracking a weak trend in global markets and fresh foreign fund outflows. Falling for the third day running, the 30-share BSE Sensex tumbled 1,017.23 points or 1.24 per cent to settle at 81,183.93.
The country's largest public sector lender State Bank of India on Monday fixed its benchmark lending rate at 7.5 per cent following a Reserve Bank directive, a move that will end the practice of sub-prime loan to corporates.
The World Bank and India have concluded negotiations for loans worth $3.2 billion for recapitalising state-run banks and funding for the India Infrastructure Finance Company Ltd, a state-run lender to infrastructure projects.
Bank of India, Canara Bank, Dena Bank, Corporation Bank and Andhra Bank are among the lenders that received capital infusion from the government.
Finance Minister P Chidambaram on Wednesday said public sector banks plan to hire 50,000 persons and open 10,000 branches in the current fiscal.
'It's advisable not to go overboard on a banking sector fund or any other sector fund.'
A little over 2,400 BSE-listed stocks ended with gains in April amid a sharp rebound in the broader markets from the March lows. This was the highest number of stocks that rose during a calendar month, as per data provided on BSE's website. The previous high was 2,322 gainers recorded in January.
SBI, PNB, Bank of Baroda, Canara Bank, Dena Bank, Central Bank of India ended down 3%-12% each.
Public sector banks have raked in more profits in the three months ended June on the back of a persistent decline in bad loans and the trend may have a positive bearing on their balance sheets in the coming quarters. In the June quarter, Bank of Maharashtra (BoM) and State Bank of India (SBI) were in the lowest quartile as far as Gross Non Performing Assets (NPAs) and net NPAs were concerned, according to an analysis of the quarterly financial numbers published by the public sector lenders. Cumulatively, all the 12 public sector banks reported a profit of about Rs 15,306 crore in the three months ended June, registering an annual growth of 9.2 per cent. However, leading public sector lenders -- SBI and PNB -- posted lower profits in the June quarter.
For the first time, PSU banks will have a non-executive chairman, giving operational responsibility to managing director and chief executive officer.
Arun Jaitley had promised to provide more than the budgeted amount.
The Budget proposals are expected to boost the fortunes of consumer goods and fast-moving consumer goods companies, which have been struggling with poor consumer demand for more than a year. The Budget announcements, such as the increase in standard deduction by Rs 25,000 for income-tax payers and slab revisions, will put more money in their hands, boosting consumer demand. Private consumption is also likely to benefit from a new scheme to offer internships to 10 million youths in the country's top 500 companies.
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