The shares of Indian PSU banks jumped in trade on September 24, pushing the Nifty PSU Bank higher up to emerge as one of the top sectoral gainers. This comes after a report said that the Indian government is considering to increase the foreign investment limit in these banks.
The Nifty PSU Bank index was up around half a percent, as seen at 11 am, bucking the overall downtrend in the market today. Earlier during the day, the index had risen around 1.6 percent to 7,567.
Top PSU bank gainers:
Indian Bank shares were the top gainers, rising nearly 3 percent, while Canara Bank shares were up nearly 2 percent.
Indian Overseas Bank (IOB), Bank of Baroda (BoB) and Bank of India shares were up nearly 1 percent, while Punjab & Sindh Bank (PSB), Central Bank of India, UCO Bank and State Bank of India (SBI) shares were trading in the green with marginal gains.
Dodging the trend, Union Bank of India, Punjab National Bank (PNB) and Bank of Maharashtra shares were trading in the red.
Govt considering to increase foreign investment limit in PSU banks: Report
The Indian government is considering to increase the foreign investment limit in public sector banks (PSBs) from the current 20 percent, the Economic Times reported citing people familiar with the matter. This comes as the Centre aims to transform these PSBs into institutions that can raise capital easily, the report added.
The government however doesn't plan to reduce its stake below the 51 percent mark, ensuring the 'public' character of these banks remains intact, the report further said, citing a senior government official. It added that the government is examining how the shareholding and voting structure of PSBs can be relaxed without compromising their essential character and decision-making capabilities of their respective boards.
Moneycontrol couldn't independently verify the report.
Govt's stake divestment plans in 5 PSU banks:
The government is progressing with its stake divestment plans through the Offer for Sale (OFS) route in five PSU banks. Bank of Maharashtra, Indian Overseas Bank, UCO Bank, Central Bank of India and Punjab and Sind Bank have been shortlisted for partial disinvestment in the coming months.
Earlier this month, M Nagaraju, Secretary (FS), Ministry of Finance, said that most banks are very healthy now, posting record profits last financial year and having a low non-performing assets (NPA) ratios. Nagaraju is hopeful that PSU banks will report a record profit in the current financial year too.
“There is no proposal to cut government stakes in PSU banks below 51%. We want to be the majority shareholder,” Nagaraju said at CNBC TV18's Banking Transformation Summit 3rd edition.
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