Nifty PSU Bank index edged lower in today’s trade, down nearly 2% as ahead of a meet between Arun Jaitley and public sector banks (PSBs) heads to discuss the issue of non-performing assets (NPAs) and the steps being taken by them to expedite the recovery of bad loans that have crossed Rs 6 lakh crore.
Among public sector banks, Bank of India (down 2.37%), Oriental Bank of Commerce (down 2.27%), Punjab National Bank (down 2.23%), Union Bank of India (down 1.99%), Bank of Baroda (down 1.93%), Canara Bank (down 1.58%), IDBI Bank (down 1.34%) and State Bank of India (down 1.14%) dragged the index.
The minister will review also the financial performance of all PSBs at the meeting, which is the first between Jaitley and them in the current financial year (FY).
"Major issues on the agenda of the meeting, the first during this fiscal, include issues and solutions relating to NPAs of the PSBs, status of MSE Credit, Stand-up India and Mudra Yojana among others," the finance ministry said in a statement.
The meeting also assumes significance as it will be the first after last month's promulgation of the ordinance amending the Banking Regulation Act, 1949.
The government had through this ordinance empowered the Reserve Bank of India (RBI) to ask banks to initiate insolvency proceedings to recover bad loans and promised more measures to resolve the NPA crisis.
At 2.15 pm, the Nifty PSU Bank index was down 1.7% as compared to S&P BSE Sensex, which was 0.5%.
Oriental Bank of Commerce (OBC) was one of the biggest laggards in the PSU Bank index after it revised the marginal cost of funds based lending rate (MCLR) for different tenors with effect from 12 June 2017. The bank's MCLR for overnight loans will be 8.1%, the rate for one month will be 8.2% and for three months it will be 8.25%.
The Nifty PSU Bank index had underperformed the market over the past one month till 9 June 2017, falling 5.9% as compared with the Sensex's 4.44% rise.