4 PSU bank stocks rally up to 18%. Know the reason?
4 PSU bank stocks: Rally up to 18%On Tuesday afternoon, stocks of PSU banks surged, led by a sharp 18% increase in Central Bank of India shares. This rally was fueled by reports that the government has approved a Rs 10,000 crore QIP (qualified institutional placement) plan for five state-owned lenders.
According to ET Now, Punjab and Sind Bank, Indian Overseas Bank, UCO Bank, Central Bank, and Bank of Maharashtra have been given the green light to raise funds amounting to Rs 2,000 crore each. The fundraising process will commence in small tranches starting from Q4. Additionally, the government has tasked the Department of Investment and Public Asset Management (DIPAM) with selling stakes in 5 PSU banks through the OFS (offer for sale) route.
Following this announcement, the Nifty PSU Bank index surged by 4%, with Central Bank, Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab & Sind Bank all experiencing gains of at least 10% each. Shares of SBI, India’s largest lender, also saw a 2.5% increase.
As of the end of September, the Government of India holds ownership stakes of 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 per data from the BSE website. Sebi mandates listed companies to maintain a 25% public shareholding, but government-owned firms have been granted an exemption from meeting these requirements until August 2026.
In the past, public sector banks have utilized QIPs to raise capital, resulting in a reduction of 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.
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