Bank stocks were in huge demand today, surging up to 15 per cent, following a slew of reforms announced in order to revive the fortunes of the public sector lenders.
Shares of Bank of Baroda surged 15 per cent, Canara Bank climbed 10.27 per cent, Bank of India jumped 9.42 per cent, Union Bank of India (5.79 per cent) and SBI (4.22 per cent) on BSE.
To revive the fortunes of public sector banks, government on Friday unveiled a seven-point plan encompassing Rs 20,000 crore immediate fund infusion, creation of a single holding company and minimising political interference.
Announcing the plan 'Indradhanush' that also includes setting up of a Bank Board Bureau (BBB) for broad-level appointments and a performance-based monitoring mechanism, Finance Minister Arun Jaitley also allayed fears of any panic over mounting bad debts at the state-run banks.
Under the plan, asset reconstruction companies will also be strengthened to deal with bad loan situation.
In order to professionalise PSBs, the government also announced appointment of two private sector bankers to head Bank of Baroda and Canara Bank while also making appointments to three other large state-run banks from within the government sector.
The government has decided to inject Rs 70,000 crore in PSBs in a four-year period starting this fiscal with Rs 25,000 crore, of which Rs 20,000 crore would be given within a month. The remaining Rs 5,000 crore would come in the last quarter of this fiscal.
