Shares of PSU banks fall on Budget announcements

Shares of public sector banks declined as much as two per cent after Finance Minister Arun Jaitley today said the lenders would require Rs 2.40 lakh crore capital by 2018 to meet global Basel III norms.
SBI ended 1.31 per cent lower, Allahabad Bank dropped 1.81 per cent and Union Bank of India fell by 1.58 per cent on the BSE.
Similarly, Bank of Baroda lost 0.95 per cent, Oriental Bank of Commerce was down 0.93 per cent, Indian Overseas Bank (0.87 per cent), State Bank of Bikaner and Jaipur (0.81 per cent), Indian Bank (0.76 per cent), Bank of India (0.55 per cent) and United Bank of India (0.19 per cent).

Proposing to provide greater autonomy to public sector banks, Finance Minister Arun Jaitley today said these lenders would require Rs 2.40 lakh crore capital by 2018 to meet global Basel III norms.
"To be in line with the Basel III norms, there is requirement to infuse Rs 2.40 lakh crore as equity by 2018 in our banks (public sector banks). To meet this huge capital requirement, we need to raise additional resources to fill this obligation," Jaitley said in the Budget speech.
A large part of this fund would be raised through public offers made to retail customers, he added.

"While preserving the public ownership, the capital of these banks would be raised by increasing the shareholding of capital in the phased manner through sale of shares largely through retail common citizen in the country," he said.
"Thus, while the government would continue to hold majority shareholding, the citizen of India will also get direct shareholding in the bank which they currently hold indirectly," he added.
Presently, there are 27 public sector banks, including SBI and its subsidiaries.