Select PSU banks gain on government's Rs 20,000 crore fund infusion plan

Shares of select public sector undertaking (PSU) banks were trading higher by up to 5 per cent on the National Stock Exchange (NSE) on Monday after the Union government sought the Parliament’s nod for infusing Rs 20,000 crore in state-owned banks.

Among individual banks, Uco Bank was up 5 per cent at Rs 13.65 on the NSE. Indian Bank, Bank of Maharashtra and Jammu & Kashmir Bank were up 2 per cent each, while Indian Overseas Bank and Bank of Baroda were up 1 per cent on the NSE.

However, State Bank of India (SBI) was down 2 per cent to Rs 199, after falling 3 per cent from its intra-day high of Rs 206 on the NSE. Bank of India and Punjab National Bank were also trading in red, falling more than 1 per cent from intra-day high on the NSE.

At 01:45 pm, the Nifty PSU Bank index was down 0.31 per cent, as compared to 0.72 per cent decline in Nifty Bank index and 0.38 per cent rise in the Nifty 50 index.

According to this Business Standard report, the Supplementary Demand for Grants for expenditure of the Central government tabled in Parliament on Monday stated that there will a cash outgo for “meeting additional expenditure of Rs 20,000 crore towards recapitalisation of public sector banks (PSBs) through issue of government securities.”

Finance Minister Nirmala Sitharaman had, during her Union Budget speech for 2020-21 in February, avoided going for recapitalisation of PSBs in this financial year. However, the Budget was presented before the Covid-19 pandemic had impacted the domestic economy.