Mumbai: Public Sector Undertaking (PSU) banks in India are facing a tough time as their stock prices have fallen sharply. On April 2, several banks recorded heavy losses due to selling pressure after raising funds through Qualified Institutional Placement (QIP).
Central Bank of India Faces Continuous Losses
Central Bank of India’s shares dropped by 10 per cent on Wednesday. This marks the third consecutive day of losses, with a 3.4 per cent fall on Tuesday and a 2.4 per cent decline last week. Investors are worried as the stock is trading below its QIP issue price.
Punjab & Sind Bank Hits 20 per cent Fall, Continues to Slide
Punjab and Sind Bank’s shares fell by 20 per cent on Tuesday and further dropped 6.5 per cent after that. Last Friday, the stock had already slipped by 2.5 per cent. The selling pressure seems strong, especially after the bank raised funds through QIP.
India Overseas Bank Also Struggles
India Overseas Bank, which raised Rs 4,136 crores through QIP, has seen its shares decline for six consecutive days. Notably, Rs 600 crores were issued to LIC and LIC Pension Fund, while IIFL Finance and NPS Trust also participated. Interestingly, LIC holds 25 per cent of the total funds raised.
Why Are Stocks Falling?
These banks are trying to reduce the government’s stake, which is currently around 90 per cent. To achieve this, they issued shares to other banks like Punjab and Sind Bank, Central Bank of India, PNB, Canara Bank, and Bank of Baroda. However, the shares are now trading below their QIP issue price, raising concerns among investors.
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