Bank stocks jumped up by around 7 per cent. This was mainly due to the strong impetus given to infrastructure, healthcare and other sectors by Finance Minister Nirmala Sitharaman during the Union Budget 2021-2022.
Stocks of banks like IndusInd Bank, ICICI Bank, State Bank of India, RBL Bank were up by more than 9 per cent. Among stocks, IndusInd Bank went up higher by 13.2 per cent to Rs 957.80 per share while ICICI Bank moved up by 12.39 per cent, State Bank of India by 10 per cent and RBL Bank went up by 9.99 per cent (at around 3.15 pm).
The Finance Minister said the government would infuse Rs 20,000 crore into public sector banks (PSBs) in 2021-22, to meet the regulatory norms. . This announcement went well among the public sector banks. Among the S&P BSE PSU, the PSBs like State Bank of India, Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank, Indian Bank, and Central Bank are trading 5 per cent higher.
Zarin Daruwala, Cluster CEO, India and South Asia markets (Bangladesh, Sri Lanka and Nepal), Standard Chartered Bank, said, “.. The landmark reform announcements in the financial sector (creation of DFI, AMC & ARC, privatisation of 2 banks, FDI limit hike in insurance, tax holiday for foreign banks in IFSC) would provide a strong boost to the economy.”
Commenting on the budget, AK Das, Managing Director and CEO, Bank of India said, “Union budget announcements feature bold initiatives and a strong resolve to pump prime Indian economy. The most fearless and progressive announcement relates to consciously going for fiscal slippage and in that bid, fast forward the V-shaped recovery in a broad based manner. Re-visit of DFI framework, creation of ARC-AMC institution are few moves which provide a good dimension to our real sector, including financial stability.”
Rajesh Sharma, Managing Director, Capri Global Capital, said, “The Budget has clearly kept the focus on boosting economic growth.” He added, “Allotment of Rs 20, 000 crore for bank recapitalisation and setting up an ARC to take care of NPAs of stressed banks and manage through alternative investment funds would securitise the irrecoverable loans.”
In FY 2020-2021, the government had not budgeted for recapitalisation. However, in September 2020, it received a parliamentary approval of Rs 20,000 crore for recapitalisation via bonds.
The minister has also announced the intent of the government to divest its stake in two public sector banks.