Bank of Baroda was down 3%, Punjab National Bank was down more than 2% and Canara Bank was down 0.70% at 2.50 pm IST, weighed down largely by poor asset quality of SBI.
Asset quality concerns have weighed on PSU banks, which have reported a higher gross non performing assets. SBI reported gross non performing assets of 4.99%, which disappointed the markets. The Bank saw its net NPA rise to 2.22%, as against 1.11% reported in the corresponding period of last year.
Analysts believe that the asset quality of banks could deteriorate even further given the economic downturn in the country. They opine that with drought like conditions throughout the country, there could be greater defaults from the agricultural sector. This could mean that the asset quality of banks could become worse in the coming quarters.