One-time credit guarantee: Public sector banks to gain more than NBFCs

Focus on asset quality takes precedence over liquidity infusion

Street sentiment for top-rated non-banking financial companies (NBFCs) such as Shriram Transport and M&M Financial Services (up about 5 per cent each) were positive on the government’s one-time credit guarantee to public sector banks (PSBs) for purchase of pooled NBFC assets. The rest of the NBFC pack, however, did not react much.

On the contrary, the CNX Nifty PSU Bank index was among the top sectoral gainers, up 1.7 per cent on Wednesday, led by State Bank of India, Bank of Baroda, Canara Bank, and Bank of India which rose in the range of 1-3 per cent.

The dichotomy in