The Nifty PSU bank index was up over 1 percent during the session, with gains in Bank of India, PNB, State Bank of India, Indian Bank, Bank of Baroda and Union Bank, among others.
Shares of PSU banks were trading higher during the day’s trade as investors cheered the reduction in bad loans of PSBs post completion of Bhushan Steel takeover.
The Nifty PSU bank index was up over 1 percent during the session, with gains in Bank of India, PNB, State Bank of India, Indian Bank, Bank of Baroda and Union Bank, among others.
The acquisition of debt-laden Bhushan Steel, under the Insolvency and Bankruptcy Code (IBC) framework, will reduce bad loans of PSBs by Rs 35,000 crore, Financial Services Secretary Rajiv Kumar said on Twitter.
"IBC transforming credit culture in NewIndia. About Rs 35,000 crore reduction of NPAs of PSBs in Bhushan Steel case. Reduction of NPAs in individual PSBs range from about Rs 500 crore to over Rs 10,000 crore, he said on the micro-blogging portal.
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Last week, Tata Steel, through its subsidiary, completed the acquisition of controlling stake of 72.65 percent in Bhushan Steel for around Rs 36,400 crore after emerging as the winning bidder in an insolvency auction.
Kumar said following the Bhusan Steel buyout, public sector banks (PSBs) will write back Rs 7,500 crore of loans which were earlier classified as NPAs.
“Future upside through over 6 crore equity shares acquired by PSBs. Decisive shift towards clean credit culture," Kumar tweeted.
Last week, Finance Minister Piyush Goyal had tweeted that the acquisition was a "historic breakthrough in resolving legacy issues of banks".
Bhushan Steel was among the 12 stressed assets the Reserve Bank of India had referred to the National Company Law Tribunal (NCLT) proceedings last year.