4 PSU bank stocks rally up to 10%, here’s why

4 PSU bank stocks rally up to 10%, here's why

NEW DELHI: Shares of four PSU banks jumped up to 10 per cent after the government infused Rs 14,500 crore capital in them in a bid to improve their financial health.

Indian Overseas Bank,

and are currently under this framework, which puts several restrictions on them, including those related to lending, management compensation and directors’ fees.
surged 10 per cent to hit a high of Rs 17.60. climbed 6.55 per cent to Rs 72.30. Central Bank of India advanced 4.89 per cent to Rs 17.15. UCO Bank gained 4.64 per cent to Rs 11.50.

According to a government notification, Rs 4,800 crore has been provided to Central Bank of India, Rs 4,100 crore to Indian Overseas Bank, and Rs 2,600 crore to UCO Bank.

The capital infusion will help these banks exit the Reserve Bank of India’s prompt corrective action framework.

The fund infusion has been done through non-interest bearing recapitalisation bonds with maturities varying between March 31, 2031 and March 31, 2036.

Investment in the special securities by public sector banks would not be considered eligible, which is required to made in government securities in pursuance of any statutory provisions or directions applicable to the investing bank, it said.

Most of the large state-owned lenders — including State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India, and Indian Bank — have already raised money from various market sources, including share sale on a private placement basis.

For the current financial year, the government had allocated Rs 20,000 crore for capital infusion into the public sector banks for meeting regulatory requirements.

Punjab & Sind Bank was given Rs 5,500 crore in November last year.

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