PSU banks rally on RBI move; shares surge up to 12%

Shares of state-run banks today soared by up to 12 percent after Reserve Bank announced amendments to recognise more balance sheet items as common equity tier-I capital which will help unlock up to Rs 35,000 crore for these lenders impacted by asset quality troubles.

Mumbai: Shares of state-run banks today soared by up to 12 percent after Reserve Bank announced amendments to recognise more balance sheet items as common equity tier-I capital which will help unlock up to Rs 35,000 crore for these lenders impacted by asset quality troubles.

Indian Bank jumped 12.27 percent, Bank of Baroda zoomed 11.71 per cent and SBI surged 10.17 percent on BSE.

 

SBI was also the top gainer among 30-Sensex blue-chips.

Among others, shares of Bank of India climbed 9.74 percent, Canara Bank rose by 8.25 percent and Punjab National Bank went up by 7.73 percent.

"The RBI has made some amendments to the treatment of certain balance sheet items for the purposes of determining banks' regulatory capital. The review was carried out with a view to further aligning the definition of regulatory capital with the internationally adopted Basel III capital standards," it had said in a press release yesterday.

 

The changes introduced yesterday include recognition of revaluation reserves arising from change in the carrying amount of a bank's property consequent upon its revaluation as common equity tier-I capital instead of the earlier tier 2 capital, it said, adding that these would continue to be reckoned at a discount of 55 percent.

 

The amendments came after a lower-than-expected provision for bank recapitalisation in the budget fOr 2016-17 at Rs 25,000 crore. 

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