PSU banks under pressure; PNB, Andhra Bank down 5%
Nifty PSU Bank index was down 4% as compared to 1% decline in Nifty 50 index
 "PSU banks under pressure; PNB, Andhra Bank down 5%")
premium
Shares of public sector undertaking (PSU) banks were under pressure with Nifty PSU Bank index down 4% on the National Stock Exchange (NSE) as provisioning of banks may rise to deal with the NPA mess, according to media reports.
Andhra Bank, Punjab National Bank (PNB), Syndicate Bank, Canara Bank and Bank of Baroda were down between 4% and 5%, while State Bank of India (SBI), Union Bank of India, Allahabad Bank, Bank of India and Oriental Bank of Commerce down 3%.
At 2:17 pm; Nifty PSU Bank index, the largest loser among sectoral indices was down 4.1% at 3,302, as compared to 1% decline in the benchmark Nifty 50 index. Nifty Bank and Nifty Private Bank index down 2% each.
Nifty PSU Bank index tanked 16% from its 52-week high of 3,921 touched on May 5, 2017 in intra-day trade against 2% rise in the benchmark index.
The government on May 5 notified the Banking Regulation (Amendment) Ordinance 2017, kick-starting a new framework to deal with Rs 6 lakh crore worth of non-performing assets (NPAs) in the Indian banking system.
The RBI recently referred 12 large NPAs in the banking system for resolution under the Insolvency and Bankruptcy Code, 2016 (IBC), based on the recommendations of its internal advisory committee (IAC).
CRISIL’s study show that banks have already provisioned around 40% for these NPAs worth around Rs 2 lakh crore, or equal to a quarter of the NPAs in the banking system, before the RBI’s move.
Krishnan Sitaraman, Senior Director, CRISIL Ratings said, “Based on CRISIL’s assessment of embedded value in the top 50 NPA cases, we estimate a 60% haircut would be needed on these loan assets. That would mean banks will have to increase provisioning by another around 25% this fiscal, compared with 9% in the last.”
"But the impact of that could be mitigated if banks are allowed to amortise the provisioning across 6 to 8 quarters," added CRISIL in a press release.
Rama Patel, Director, CRISIL Ratings said, “While the IBC route could entail a substantial markdown of loan assets by banks, the ability, especially of public sector banks, to absorb such losses and the consequent impact on their capital position will need to be monitored closely in the road ahead.”
Andhra Bank, Punjab National Bank (PNB), Syndicate Bank, Canara Bank and Bank of Baroda were down between 4% and 5%, while State Bank of India (SBI), Union Bank of India, Allahabad Bank, Bank of India and Oriental Bank of Commerce down 3%.
At 2:17 pm; Nifty PSU Bank index, the largest loser among sectoral indices was down 4.1% at 3,302, as compared to 1% decline in the benchmark Nifty 50 index. Nifty Bank and Nifty Private Bank index down 2% each.
Nifty PSU Bank index tanked 16% from its 52-week high of 3,921 touched on May 5, 2017 in intra-day trade against 2% rise in the benchmark index.
The government on May 5 notified the Banking Regulation (Amendment) Ordinance 2017, kick-starting a new framework to deal with Rs 6 lakh crore worth of non-performing assets (NPAs) in the Indian banking system.
The RBI recently referred 12 large NPAs in the banking system for resolution under the Insolvency and Bankruptcy Code, 2016 (IBC), based on the recommendations of its internal advisory committee (IAC).
CRISIL’s study show that banks have already provisioned around 40% for these NPAs worth around Rs 2 lakh crore, or equal to a quarter of the NPAs in the banking system, before the RBI’s move.
Krishnan Sitaraman, Senior Director, CRISIL Ratings said, “Based on CRISIL’s assessment of embedded value in the top 50 NPA cases, we estimate a 60% haircut would be needed on these loan assets. That would mean banks will have to increase provisioning by another around 25% this fiscal, compared with 9% in the last.”
"But the impact of that could be mitigated if banks are allowed to amortise the provisioning across 6 to 8 quarters," added CRISIL in a press release.
Rama Patel, Director, CRISIL Ratings said, “While the IBC route could entail a substantial markdown of loan assets by banks, the ability, especially of public sector banks, to absorb such losses and the consequent impact on their capital position will need to be monitored closely in the road ahead.”
| COMPANY | 05/05/2017 | PREV CLOSE | LATEST | LOSS(%) | % chg |
| SYNDICATE BANK | 87.40 | 76.50 | 72.15 | -5.69 | -17.45 |
| PUNJAB NATL.BANK | 174.65 | 143.85 | 136.15 | -5.35 | -22.04 |
| ANDHRA BANK | 71.25 | 55.80 | 53.05 | -4.93 | -25.54 |
| CANARA BANK | 394.55 | 339.55 | 323.40 | -4.76 | -18.03 |
| PUN. & SIND BANK | 67.90 | 52.85 | 50.35 | -4.73 | -25.85 |
| VIJAYA BANK | 82.75 | 74.65 | 71.25 | -4.55 | -13.90 |
| INDIAN BANK | 336.90 | 288.95 | 276.55 | -4.29 | -17.91 |
| BANK OF BARODA | 187.35 | 160.65 | 153.90 | -4.20 | -17.85 |
| UNION BANK (I) | 186.95 | 146.65 | 140.65 | -4.09 | -24.77 |
| ALLAHABAD BANK | 84.20 | 69.65 | 66.85 | -4.02 | -20.61 |
| CORPORATION BANK | 60.65 | 51.85 | 49.85 | -3.86 | -17.81 |
| ST BK OF INDIA | 295.95 | 288.85 | 277.70 | -3.86 | -6.17 |
| ORIENTAL BANK | 174.65 | 143.55 | 138.30 | -3.66 | -20.81 |
| UNITED BANK (I) | 23.25 | 19.50 | 18.85 | -3.33 | -18.92 |
| BANK OF INDIA | 183.75 | 134.05 | 129.70 | -3.25 | -29.41 |
| Nifty PSU Bank | 3750.50 | 3444.25 | 3302.00 | -3.25 | -11.96 |
| Nifty 50 | 9286.30 | 9574.95 | 9488.00 | -3.25 | 2.17 |
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%