Shares of public sector banks gained on Monday after government on Friday announced a seven-pronged PSU banks’ revival plan ‘Indradhanush’. The government on Friday also said that it would infuse Rs 20,088 crore into 13 PSU banks within a month’s time with SBI cornering a hefty Rs 5,531 crore.
Othe PSU banks, Bank of India, IDBI, Punjab National Bank and IOB will get Rs 2,455 crore, Rs 2,229 crore, Rs 1,732 crore and Rs 2,009 crore, respectively.
Cheering the news, the CNX PSU Bank index on the National Stock Exchange surged 6.19 per cent to 3,699 on Monday. Share price of Bank of Baroda surged the most— 15 per cent to Rs 212.05, it was followed by Canara Bank (up 12.87 per cent), Bank of India (up 8.52 per cent), State Bank of India (up 3.99 per cent) and Union Bank (up 5.63 per cent) on NSE.
The seven elements include capitalisation, de-stressing, appointments, board of bureau, capitalisation, framework of accountability and governance reforms.
Finance ministry has plans to inject $11 billion capital into debt-laden state banks over next four years.
Arundhati Bhattacharya, chairman, State Bank of India had said on Friday, “The seven pillared plan, Indradhanush, to revamp functioning of public sector banks will reinvigorate PSU banks and strategically enable them to take informed decisions in their quest for greater efficiencies. These steps are likely to alter the scope of the banking landscape in the country and enable it to realiSe potential hitherto unexplored.”
Citi is positive on state-run banks and sees Bank of Baroda as the biggest beneficiary. Motilal Oswal is also bullish on Bank of Baroda shares (BOB) and has upgraded it to “buy” from “neutral”.
(With inputs from Reuters)