Mega merger of public sector banks is a good move, but ill-timed: Analysts

Fear of credit growth, particularly for larger banks, spooked PSB stocks on Tuesday

The merger of public sector banks (PSBs) may be the much-needed long-term positive for the sector. However, their stock prices didn’t echo these sentiments when trade opened after an extended weekend.

Stock prices of anchor banks, or those absorbing the smaller franchisees such as Punjab National Bank (PNB), Canara Bank, Union Bank of India, and Indian Bank, fell over 8–12 per cent. Interestingly, investors — even in the feeder or the smaller banks which have in the last three-four quarters exited from the prompt corrective action (PCA) framework — weren’t too excited with the idea of being taken over by