Shares of public sector banks, including State Bank of India (SBI) and Punjab National Bank (PNB), were trading mixed on the National Stock Exchange (NSE) on Wednesday as the government's proposed PSB merger scheme came into effect from today. The consolidation, that will merge 10 PSBs into four, comes at a time when the country and financial system is grappling with adverse fallout of the Covid-19 pandemic.
Effective April 1, Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will merge into Punjab National Bank. Mumbai-headquartered Union Bank, on the other hand, will absorb Hyderabad-headquartered Andhra Bank and Mengaluru- headquartered Corporation Bank. Bengaluru-headquartered Canara Bank will take Syndicate Bank, and Indian Bank will acquire Kolkata-headquartered Allahabad Bank. Each of the amalgamated entities with scale and national reach would have a business of over Rs 8 trillion.
"Credit growth in the system (Banks + NBFCs/HFCs) has already weakened to nearly 5 per cent in Dec-19. With NBFC growth already down sharply over the past year and increasing risk averseness and further tightness in the funding markets, we expect growth to remain muted... PSU Banks growth has also been muted ( round 4% YoY) and with 10 of the PSU Banks under-going a merger effective April 1, growth is likely to remain weak," said analysts at Credit Suisse in a sector update report.
At 10:05 am, the Nifty PSU Bank index was trading at 1,299.55 level, down 1.9 per cent. The index hit a low of 1,279.30 in the early morning deals. In comparison, the benchmark Nifty50 index slipped over 2 per cent.
Among individual stocks, SBI declined 4.9 per cent to Rs 187.05, on the NSE. Besides, PNB slipped 5.7 per cent, and Bank of Baroda was down 2.8 per cent.
On the upside, Indian Bank surged 7.6 per cent to Rs 46.6 on the NSE, followed by Central Bank of India (2.4 per cent), Union Bank of India (2 per cent), and Canara Bank (1.6 per cent).
 "PSB merger effect: State Bank of India, PNB dip up to 6%, Indian Bank up 8%")
