Bank of Maharashtra, BOI, IOB share prices rally 5-14% on reports of banking industry overhaul

Share prices of PSU banks were up in the morning trade on July 21, a day after reports emerged that the government was looking to privatise more state-owned banks and reduce their numbers to five.

Bank of Maharashta share price zoomed 14 percent followed by Central Bank of India that surged over 11 percent. Bank of India jumped more than 7 percent at 0925 hours. UCO Bank was up 9 percent while Indian Overseas Bank gained 5 percent.

As part of the banking industry overhaul, the government would sell majority stakes in Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank, leading to effective privatisation of these state-owned lenders, reports quoted a government official as saying.

Moneycontrol could not independently verify the story.

"The idea is to have four-five government-owned banks," said a senior government official. At present, India has 12 state-owned banks.

The government is working on a privatisation plan to help raise money by selling assets in non-core companies and sectors when the country is strapped for funds because of the coronavirus outbreak.

The divestment plan may not happen in this financial year due to unfavourable market conditions, the sources said.

Bank of Maharashtra was one of the most active stocks on NSE in terms of volumes, with 70,79,442 shares being traded.

Shares of Indian Ovreseas Bank (IOB), Punjab & Sind Bank hit the upper circuit on NSE. For IOB there were pending buy orders of 1,989,185 shares, with no sellers available. In Punjab & Sind Bank, there were pending buy orders of 237,105 shares, with no sellers available.

The Nifty PSU Bank index jumped over 2 percent in the morning trade led by State Bank of India, Union Bank of India, Bank of Baroda and Indian Bank.