PSU bank stocks rally up to 18%. What's the good news?
- TFT
- Jan 14
- 1 min read
Led by a sharp upside of 18% in Central Bank of India shares, stocks of PSU banks rallied on Tuesday afternoon after it was reported that the government has approved a Rs 10,000 crore QIP (qualified institutional placement) plan for five state-owned lenders.
Punjab and Sind Bank, Indian Overseas Bank, UCO Bank, Central Bank and Bank of Maharashtra have got the nod to raise funds to the tune of Rs 2,000 crore each, ET Now reported. The fund-raising exercise will begin in small tranches from Q4.
Other than that, the government has also mandated the Department of Investment and Public Asset Management (DIPAM) to sell stakes in 5 PSU banks via OFS (offer for sale) route.
Following the announcement, Nifty PSU Bank index jumped 4% with Central Bank, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank rising by at least 10% each.
Shares of SBI, India's largest lender, also jumped around 2.5%.
The Government of India owns more than 93% in Central Bank of India, 96.4% in Indian Overseas Bank, 95.4% in UCO Bank and 98.3% in Punjab and Sind Bank as of end-September, according to data on the BSE's website.
The Securities and Exchange Board of India (Sebi) requires listed companies to maintain a 25% public shareholding, but has exempted government-owned firms from meeting these norms till August 2026.
In the past, public sector banks have launched QIPs to raise capital, which has in turn lowered the government's stake in state-run banks. PNB raised Rs 5,000 crore through a QIP in September, while Bank of Maharashtra raised Rs 3,500 crore in October.
Courtesy
The Echonomic Times
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