Bank stocks in demand, surge up to 4% after alternative mechanism
New Delhi: Bank stocks today rose up to 4 per cent after the government decided to set up an alternative mechanism to oversee the proposals for consolidation of public sector lenders.
Shares of Punjab National Bank gained 3.26 per cent, Indusind Bank rose by 2.21 per cent, SBI (1.70 per cent), ICICI Bank (1.67 per cent), HDFC Bank (1.29 per cent), Federal Bank (1.19 per cent) and Kotak Mahindra Bank (1.08 per cent) on BSE. Bank of Baroda advanced by 1.08 per cent, AXIS Bank (0.77 per cent) and Yes Bank (0.52 per cent).
The BSE bank index also went up by 1.39 per cent to end at 27,455.08. Among others, Allahabad Bank surged 4.21 per cent and Bank of India rose by 3.12 per cent. "Banking stocks grabbed investors attention on account of cabinet nod to oversee PSU banks consolidation," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.
The government today decided to set up an alternative mechanism to oversee the proposals for consolidation of public sector banks (PSBs) with a view to creating fewer but stronger lenders. The alternative mechanism will be decided by Prime Minister Narendra Modi, Finance Minister Arun Jaitley said after the Union Cabinet meeting.
The government aims to create strong and competitive banks in public sector space to meet the credit needs of the growing economy, absorb shocks and have the capacity to raise resources without depending on the state exchequer, he said.