PSU bank stocks gain as Cabinet approves changes to banking code

Shares of top state-owned lenders surged in Wednesday’s trade as the Union Cabinet on Wednesday gave approval to amend the Insolvency and Bankruptcy Code to prevent wilful defaulters from bidding for stressed assets, two TV channels reported citing unnamed sources.

State Bank of India jumped as much as 2.7 per cent to Rs. 339.6 and Punjab National Bank gained as much as 3.5 per cent to Rs. 192.9.

The Finance Ministry had earlier asked banks to ensure that wilful defaulters were prevented from buying same stressed assets again as it strives to cut the record $147 billion soured loans accumulated in the banking sector.

Finance Minister Arun Jaitley is scheduled to brief the media later on Wednesday.

Preventing wilful defaulters from bidding for stressed assets will help banks get better prices for the assets and will move the pending cases faster, says A K Prabhakar, head of Research, IDBI Capital.

NSE’s Nifty PSU Bank index rose as much as 2.4 per cent, its biggest intraday percentage gain since November 17.