The S&P BSE PSU Index is painted red, led mainly by PSU banking stocks falling like nine pins today. The pack of losers is led by Andhra Bank, followed by IDBI, Oriental Bank, Union Bank, PFC, Bank of India, Bank of Maharashtra, Allahabad Bank, Corporation Bank, Central Bank, UCO Bank, Canara Bank and et al.
Apart from the overall loss of faith in PSU banks following one scam after the other, the market is bracing itself for a very poor show of banks in Q4FY18 as they expect elevated NPAs to once again dominate the story. The new rules stipulate that starting 1 March, lenders must implement a resolution plan within 180 days for accounts of at least Rs2,000 crore.
The RBI recently scrapped corporate debt restructuring (CDR), strategic debt restructuring (SDR), sustainable structuring of stressed assets (S4A) and joint lenders forum (JLF) schemes to restructure defaulted loans. And this move is sure to spike up the NPL or none-performing loan divergence.
With all this overhang already existing, there was news of another scam – the Enforcement Directorate filed a chargesheet against a former Andhra Bank director in an alleged Rs.5000 crore bank fraud case involving Gujarat-based pharma firm, Sterling Biotech.