PSU banks rally on extension of Basel III deadline

Mar 28 2014, 14:51 IST
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PSU banks are likely to have a harder time trying to raise capital to meet the Basel III norms. PTI PSU banks are likely to have a harder time trying to raise capital to meet the Basel III norms. PTI
SummaryPSU banks are likely to have a harder time trying to raise capital to meet the Basel III norms.

Shares of PSU banks rallied on the bourses after the Reserve Bank of India (RBI) extended the deadline for meeting the Basel III norms by a year to March 31, 2019.

According to experts, PSU banks are likely to have a harder time trying to raise capital to meet the Basel III norms. "The key issue with SOE (PSU) banks over the next 2-3 years is likely to be lack of capital. The starting point of tier 1 ratios is well below our view of steady state tier 1 for SOE banks under Basel 3 (above 10%)," Morgan Stanley said in a report.

State Bank of India (2.96%), United Bank of India (3.41%), Punjab National Bank (4.14%), Bank of Baroda (2.33%) were trading higher on the BSE at 1.15 pm IST.

On Thursday, the US-based brokerage Goldman Sachs upgraded Punjab National Bank, Bank of Baroda and State Bank of India, citing likely decline in bad loans as economy improves.

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