Banking Stocks Surge As FM Promises Banking Sector Reforms

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Shares in banking stocks saw a spectacular rally, after Finance Minister Arun Jaitley promised to speed-up reforms in the PSU banking space.

Bank of Baroda which reported a record set of losses gained a huge 20 per cent in trade, while State Bank of India jumped 7 per cent and Canara Bank rallied 6 per cent in trade. Bank of India was also having a good session with gains of 8 per cent.

Banking Stocks Surge As FM Promises Banking Sector Reforms
Finance Minister Arun Jaitley promised to initiate reforms to improve governance in public sector banks (PSBs), which have reported substantial non performing assets for the quarter ending Dec 31, 2015.

Jaitley said India has not reached a stage where the government can pull out of banking. "Banks have to work on banking considerations. This is an area where we have probably erred in the past," said Jaitley.

Banking stocks have been at the receiving end and have fallen sharply in the last few months. Most of the PSU banking stocks are trading at fresh 52-week lows. Following RBI guidelines asking banks to provide additionally for likely non performing assets, NPAs have soared.  Take a look at some of the non performing assets reported by banks.

Banks with Best NPAs for
December Quarter
BanksGross NPANet NPA
HDFC Bank0.97 per cent0.29 per cent
Kotak Bank2.30 per cent0.36 per cent
Yes Bank0.66 per cent0.61 per cent
IndusInd Bank0.82 per cent0.33 per cent

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Banks with worst NPA
BanksGross NPANet NPA
State Bank of India5.10 per cent2.89 per cent
ICICI4.72 per cent2.28 per cent
PNB8.47 per cent5.86 per cent
IOB12.64 per cent8.32 per cent
Central Bank of India8.95 per cent5.30 per cent
Bank of India8.18 per cent5.25 per cent

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