Central Bank of India gains 6 per cent & SBI jumps 4 per cent; other PSU Banks gain too

A high level of provisioning by the public sector banks surely stresses on the needs to have measures to clean up the books of banks and provide for additional support. With the announcements of PSU Banks, their shares zoomed.  

In line with this, an asset reconstruction company will be set up that will take over stressed loans. The Finance Minister mentioned in the Budget that the asset reconstruction and asset management companies will be set up for value realisation.  

Further, the government has also approved an increase in the cover from Rs 1 lakh to Rs 5 lakh for bank depositors. Amendments to it, allow depositors for easy and time-bound access to their savings to the extent of the deposit insurance. This is aimed at helping depositors in banks that are currently under stress.  

Recapitalisation for PSU Banks is extremely important for further recapitalisation. Government is to allot around Rs 20,000 crore for further recapitalisation of public sector banks in FY22. 

Nifty PSU Bank index jumped by around 3 per cent post the announcement.  

The shares of Bank of Baroda gained by 3.82 per cent, Canara Bank rose by 2.58, Jammu & Kashmir gained by 1.65 per cent, Indian Bank increased by 2.77 per cent, etc.