PSU banks in the limelight

PSU Banks are up among the top gainers on the BSE today morning, led by Corporation Bank, Central Bank, SBI, IOB, Allahabad Bank, Syndicate Bank, J&K Bank, Indian Bank, Oriental Bank of Commerce.

The stock have surged on FM, Nirmala Sitharaman’s talk on Friday wherein she announced a Rs.70,000 crore recapitalization in PSU banks. This is to be upfront rather than late in the year and mostly via recap bonds; it would thus be cash and fiscal neutral.

The FM said that additional lending and liquidity to the tune of Rs 5 lakh crore would be made available by providing this capital for the PSBs, which in turn will strengthen and help corporates, MSME, retail borrowers, and small traders.

CLSA published a research report on this and said, “An upfront recap of PSU banks within budgeted levels, refinancing lines to housing financiers, and support for a credit guarantee for non-banking financial companies (NBFCs) are three of the key positives from the announcements.”