Shares of the Mumbai-headquartered state-run lender Bank of India jumped over 12% in the early trades on Tuesday after the PSU bank claimed that it has recovered an amount totalling Rs 7,000 crore in last two months amid the downtrodden conditions of PSU banks following the jitters of India’s biggest banking scam at nation’s second-largest PSU bank PNB. Bank of India had recovered Rs 7,000 crore worth Standby Letters of Credit in the last two months and the balance of Rs 2,000 crore would be recovered in another two months, PTI reported citing Executive Director N Damodharan. Following the first reaction to the announcement, shares of Bank of India advanced as much as 12.2% to a day’s high of Rs 106.7 on NSE.
A huge trading volume was witnessed on the counters of Bank of India, as at 11:35, more than 3.1 crore shares exchanged hands on both NSE and BSE with about 2.8 crore shares on NSE alone. The stock of Bank of India was the biggest gainers among the constituents of benchmark Nifty PSU Bank index followed by the shares of Union Bank of India, Bank of Baroda, Oriental Bank of Commerce, Syndicate Bank, Andhra Bank, Allahabad Bank, Indian Bank, Punjab National Bank, Canara Bank, IDBI Bank and State Bank of India. The Nifty PSU Bank index gained 4.24% to a day’s high of 2,965.4 on Tuesday.
The recovery of Rs 7,000 crore of Standby Letters of Credit will substantially improve the Bank’s balance sheet, N Damodharan, Executive Director, Bank of India said to PTI. The bank has embarked on a plan, following restrictions from RBI after the central bank placed Bank of Indian under its list of PCA (Prompt Corrective Action) framework, including PSU banks such as Dena Bank, Central Bank of India, Bank of Maharashtra, UCO Bank, IDBI Bank, Oriental Bank of Commerce, Indian Overseas Bank, Corporation Bank, Bank of India, Allahabad Bank and United Bank of India. According to PTI a report, the Bank of Baroda is aiming to bring down its net NPA (non-performing assets) ratio substantially, to below 6%.