Canara Bank, Bank of Baroda and Bank of India lost near 4 per cent in trade. The PSU banking shares were down today on several worries for the sector. Reports that the appointment of the former Chairman of Syndicate Bank who is now arrested on bribery charges was not transparent, reports of investigation by the CBI on loans granted by IDBI Bank to Kingfisher Airlines and rising inflation took their toll on banking stocks.

Yesterday's consumer price inflation data which further raised worries on interest rates remaining elevated for a long time, offered little cheer for banking stocks.

Dealers say PSU banking stocks may continue to drop as the sector is plagued with too many problems including bad loans.

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