PSU bank stocks fall after recapitalisation plan announcement

NEW DELHI: PSU bank stocks fell up to 6 per cent a day after the government said it will infuse Rs 88,139 crore capital in 20 public sector banks (PSBs) before March 31.

Shares of Syndicate Bank tanked 5.82 per cent, Punjab National Bank 5.73 per cent, Bank of Baroda 4.80 per cent, SBI 4.32 per cent and Oriental Bank of Commerce shed 4.28 per cent on BSE.

On similar lines, Allahabad Bank fell 3.21 per cent, Bank of India 2.43 per cent and United Bank of India lost 0.27 per cent.Meanwhile, IDBI Bank shares rose 1.07 per cent on being allocated the highest capital infusion amount among PSBs.

The government yesterday said it will infuse an unprecedented Rs 88,139 crore capital in 20 public sector banks (PSBs) before March 31 to boost lending and revive growth. It unveiled steps to tackle the bad loan problem which has reached record levels.
The lenders, which include State Bank of India, account for more than two-third of India's banking assets as well as most of the over Rs 8 lakh crore of non-performing assets (NPAs) or bad loans.

The capital infusion is part of the massive Rs 2.11 lakh crore bank recapitalisation plan announced by the government in October last year. It is spread over two financial years -- 2017-18 and 2018-19.

The finance ministry will raise Rs 80,000 crore through recapitalisation bonds, and provide another Rs 8,139 crore from the Budget to recapitalise the banks.