Public sector banks trade mixed as re-capitalisation details emerge

Shares of public sector banks were trading mixed at 10:12 IST on BSE after the government yesterday, 24 January 2018, unveiled details of the re-capitalisation of the banks announced in October 2017.

Among key public sector banks, IDBI Bank (up 2.83%), Bank of India (up 1.36%), Indian Overseas Bank (up 1.71%) and Corporation Bank (up 0.38%) edged higher. Punjab National Bank (down 3.14%), Bank of Baroda (down 2.92%), State Bank of India (down 2.26%) and Indian Bank (down 3.33%) edged lower.

Meanwhile, the S&P BSE Sensex was down 45.08 points or 0.12% at 36,116.56.

The Government of India (GoI) after market hours yesterday, 24 January 2018, unveiled details of the re-capitalisation of public sector banks (PSBs) announced in October 2017. The capital infusion plan for 2017-18 includes Rs 80000 crore through recap bonds and Rs 8139 crore as budgetary support. This plan addresses regulatory capital requirement of all PSBs and provides a significant amount towards growth capital for increasing lending to the economy.

The recap would be accompanied by a strong reforms package across six themes incorporating 30 action points. Capital infusion by the GoI is contingent on performance of PSBs on the reform. Whole time directors of PSBs would be assigned theme-wise reforms for implementation. Their performance in this regard would be evaluated by the bank board.

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