PSU bank stocks jump on hopes of recapitalisation bonds

Shares of eleven PSU bank rose by 0.97% to 8.5% at 13:45 IST on BSE after report suggested that the government was seeking to take Parliament's nod for additional Rs 80000 crore bonds aimed at recapitalising the ailing public sector banks.

Meanwhile, the S&P BSE Sensex was up 177.07 points or 0.52% at 33,970.45. The S&P BSE Bankex advanced 145.62 points or 0.51% to 28,778.47, outperforming the Sensex.

Among public sector banks, UCO Bank (up 8.5%), Syndicate Bank (up 1.44%), Punjab National Bank (up 3.99%), Corporation Bank (up 3.63%), Bank of Baroda (up 4.12%), State Bank of India (SBI) (up 1.95%), Union Bank of India (up 2.34%), Canara Bank (up 2.34%), Bank of India (up 3.98%) and United Bank of India (up 3.89%) edged higher.

Allahabad Bank rose 0.97%. The bank said that the Reserve Bank of India has placed the bank under prompt corrective action framework, consequent to the onsite inspection under the risk based supervision model carried out for the year ended March 2017 and the report issued thereof. The announcement was made after market hours yesterday, 3 January 2018.

Moreover, the finance ministry recently approved proposal for infusion of Rs 7577 crore in 6 weak public sector banks (PSBs) as part of the recapitalisation plan to bolster capital adequacy ratio.

Finance minister Arun Jaitley in October 2017 had announced an unprecedented Rs 2.11-lakh-crore two-year road map to strengthen public sector banks, reeling under high non-performing assets (NPAs) of which Rs 1.35 lakh crore was in form of government bonds and Rs 76000 crore in the form of budgetary allocation and market raising.

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