- By Aditya Pratap Singh
- Wed, 15 Jan 2025 12:06 PM (IST)
- Source:JND
Banking Stocks: Shares of five major public sector banks - Central Bank of India, Indian Overseas Bank, UCO Bank, Punjab & Sind Bank, and Bank of Maharashtra - came under selling pressure on Wednesday's day trade. Most of them traded in a highly volatile fashion, with sharp declines reported in almost all of the counters immediately after a development surrounding government stake sale plans was unveiled.
Central Bank of India saw its shares fall 6% trading at Rs 51.55. UCO Bank lost more than 6% trading at Rs 42.34. Punjab & Sind Bank declined over 5% trading at Rs 45.49, and Bank of Maharashtra slipped over 4% trading at Rs 50.69. Only Indian Overseas Bank is an exception, and it rose 7% to Rs 50.10 even when there was a negative vibe in the PSU banking space.
Concerned Stake Sale Plans
The sharp decline in the share price is something that an observer might charge on account of the government's decision to divest its stake in these lenders. Reports said that the central government had approved the plan to raise ₹10,000 crore through Qualified Institutional Placement in these five PSU banks. The raising of the funds will kick off in small rural phases from the last quarter of the financial year.
The DIPAM has also been asked to sell government stakes in the banks through the Offer for Sale route, which is in line with the strategy of the government for achieving the minimum public shareholding norm of 25% in PSU banks by August 2026, according to an additional media option presented to CNBC.
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Key Meeting on Financial Inclusion
On account of another important development, the Indian Finance Ministry has called a meeting of the heads of public sector banks for Wednesday to review the progress of various financial inclusion schemes. Secretary for Financial Services, M. Nagaraju, will chair the meeting, which will also have some participation from private-sector banks.
These include Jan Suraksha, Mudra Yojana, and PM Swanidhi schemes. It will critique the onset and performance of these schemes, concerning their implementation status.
This meeting wishes to ensure the proper delivery of these welfare schemes while judging their outreach to the respective beneficiaries.
Market Sentiment
It has impacted the clearing of PSU banking stocks by the investors, as they are averse to probable increased supply into the market if the government proceeds with the stake selling and raises funds from the market. Nevertheless, the move forms part of the overall efforts made by the government to ensure that there is financial stability, regulation compliance, and an increase in public participation in these banks.
The market participants shall track closely future developments about the stake sale and financial inclusion schemes since these decisions could affect lthe ong-term performance of the PSU banking sector.
