Shares of public sector banks (PSBs) – Indian Overseas Bank (IOB) and Central Bank of India – rose in value on Monday following reports suggesting the two financial institutions could be privatized.

Shares of the Mumbai-based central bank closed up 8% at Rs 23 per share on BSE, while those of Chennai-based IOB closed up 12% at Rs 21.55 per share. action.

The PSU Bank index closed slightly higher (0.36 percent) at 2,500.6 on the NSE, compared to last Friday.

While the Central Bank announced the results of T4FY21 and FY21 on Monday, the IOB board is expected to meet on June 14, 2021 to assess the financial performance of Q4 and FY21.

The Central Bank recorded a net loss of Rs 1,349 crore in the fourth quarter ended March 2021 (T4FY21) due to lower net interest income (NIM). It had posted a net loss of Rs 1,529 crore in the fourth quarter of the last fiscal year ended March 2o2o.

For the whole of fiscal year 21, the net loss was reduced to Rs 888 crore against Rs 1,121 crore, while its capital adequacy rose to 14.81% in March 2021 from 11.72% ago. a year. Common Equity Tier-I rose to 12.82% in March 2021, from 9.33% the previous year.

Its NIM fell 21.3% to Rs 1,516 crore at T4FY21 from Rs 1,926 crore at T4FY20. NIMs decreased to 2.04% in T4FY21 from 2.75% in T4FY20. His other income increased from Rs 902 crore to Rs 795 crore.

Gross NPA fell to 16.55% in March 2021 from 18.92% a year ago, while net NPA fell to 5.77% from 7.63% in the same period. The provisioning coverage rate increased from 77.29% to 82.54% in March 2021 compared to March 2020.

Even as talks about the privatization of PSBs gained ground, global rating agency Fitch said on Monday that the government’s move risked being linked to political opposition and structural challenges, including heightened tension on balance sheets, due to the ongoing pandemic.

The pandemic is expected to keep bank performance subdued over the next two to three years. Political support for the legislative changes, which are needed to close the sale, could be a significant hurdle for the government, he said.

There may also be more resistance from the unions this time around, who will be against the removal of the safety net from state property. The success of the plan will also require sufficient interest from investors keen to acquire and manage large stakes in state-owned banks, Fitch said in a statement.

The privatization plan was announced in the Union budget for 2021-2022 as part of the government’s broader divestment targets for fiscal year 22. It includes the privatization of several other non-financial public entities and the listing of the 100% owned Life Insurance Corporation of India.

Dear reader,

Business Standard has always strived to provide up-to-date information and commentary on developments that matter to you and have broader political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these difficult times resulting from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative views and cutting edge commentary on relevant current issues.
However, we have a demand.

As we fight the economic impact of the pandemic, we need your support even more so that we can continue to provide you with more quality content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscriptions to our online content can only help us achieve the goals of providing you with even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital editor

About The Author

Related Posts

Leave a Reply

Your email address will not be published.