State-owned banks are becoming dear ones for investors
March has turned out to be a worst quarter for state-run banks, as they have been facing double-whammy of making some bigger provisions for bad loans and at the same time they are facing a hit on their treasury income. This domineering trend has not stopped prescient investors who are betting that the worst might be finished for the banking sector.
They had many reasons to cherish. The shares of public sector banks including State Bank of IndiaBSE 0.47 %, Vijaya BankBSE 1.98 %, Bank of BarodaBSE 0.34 %, Indian Overseas BankBSE and Union Bank of India0.00 %, Oriental Bank of CommerceBSE 0.20 % and the Corporation Bank have either scaling yearly highs or trading close to such levels. As Investors expect the tough stance of the regulator regulator (in dealing with bad loans) and the government’s drive is to reward performers to begin delivering the results.
The official said that with the economy poised to grow over the next few quarters, those banks are expected to perform well leaving behind their worst performance.
Bi-monthly policy in April, the Reserve Bank of India had implicit at dealing with large bad loans strongly. It has also anticipated the country’s growth at 7.4% in 2017-18 when compared to 6.7% in the previous financial year.
It would be the RBI’s endeavor to put the resolution of banks stressed assets on a firm balance and create some friendly conditions for bank credit to revive and flow to production sectors of the economy, the central bank had stated.
It will be the RBI’s endeavor to put the resolution of banks’ stressed assets on a firm footing and create congenial conditions for bank credit to recover and flow to production sectors of the economy, the central bank stated.
From the past one month, the sector index, BSE Bankex, has risen 2.3% with many state-owned bank shares have been gaining considerably. With a total debt of Rs 2.45 lakh crore, as many as 61 large debtors having a total debt of Rs 2.45 lakh crore have now undergoing a rejig through the strategic rearrangement scheme. ET has reported on Monday that the banks are expected to report record provisions eating into their profits in the January-March quarter.