Shares of state-run banks Indian Overseas Bank (IOB) and Central Bank of India (CBI) rose 18 percent and 16 percent, respectively, in early trade on June 22 on reports that the government has shortlisted these banks for divestment.
Central Bank of India touched a 52-week high of Rs 28.30 and Indian Overseas Bank touched a 52-week high of Rs 27.95.
The Centre has shortlisted the CBI and IOB for divestment, CNBC Awaaz has reported on June 21. In the previous session, the share prices were locked at 20 percent upper circuit.
The two state-run banks might see a 51 percent sale in the first phase of disinvestment, according to the report.
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The government will amend the Banking Regulations Act, and some other banking laws for divestment, the news channel reported.
The weak financial metrics of lenders like CBI and IOB could lead to unexpected hurdles in the government's plan to privatise the lenders, banking analysts and experts told Moneycontrol.
Both the IOB and CBI are currently under the Prompt Corrective Action (PCA) framework imposed by the Reserve Bank of India (RBI). Under the PCA framework, the central bank imposes certain business restrictions on lenders with weak financial metrics.
The Centre has set an ambitious divestment target of Rs 1.75 lakh crore for FY22.
At 09:19 hrs, Indian Overseas Bank was quoting at Rs 26.50, up Rs 2.90, or 12.29 percent and Central Bank of India was quoting at Rs 27.20, up Rs 2.90, or 11.93 percent on the BSE.