PSU bank stocks hog limelight

Shares of 8 public sector banks rose 2.2% to 7.7% at 14:15 IST on BSE on reports that the government is working with insurance and banking regulators to ease the stringent norms for banks for raising capital through additional Tier I bonds.

Punjab National Bank was up 6.6% at Rs 133.30. State Bank of India was up 2.2% at Rs 232.40. Bank of India was up 4.6% at Rs 117.35. Bank of Baroda was up 3.8% at Rs 165.95. Union Bank of India was up 5.2% at Rs 142.15. Canara Bank was up 7.7% at Rs 258.50. Oriental Bank of Commerce was up 4.6% at Rs 126.50. Syndicate Bank was up 4.1% at Rs 81.20.

Meanwhile, the S&P BSE Sensex was up 43.08 points or 0.15% at 27,858.26.

The proposal of easing stringent norms for banks for raising capital through additional Tier I (AT1) bonds was discussed in the recent meeting of regulators viz. the Financial Stability Development Council (FSDC), according to reports. Some protection on investment made by insurers in banks' AT1 is being mulled, reports suggest. According to reports, the Insurance Regulatory and Development Authority of India (IRDAI) is not convinced that insurers should be participating in AT1 bonds given these bonds are perpetual in nature and the bank can write off such investments in time of stress.

Meanwhile, media reports also suggested that the government has finalised plan for allocating around Rs 15000 crore to 12 public sector banks in the first tranche during the current financial year. The remainder will be disbursed based on the performance of these lenders, according to reports. The government has set aside Rs 25000 crore for recapitalization of PSU banks for the current financial year.

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