Union Bank, other PSU Bank shares gain up to 4% as consolidation buzz gathers pace

Shares of India’s state-run lenders, Union Bank of India Ltd., Bank of India Ltd., and peers gained up to 4% on Wednesday, September 10, as the buzz around further consolidation of public sector banks gathered momentum.All constituents of the Nifty PSU Bank index are trading with gains in Wednesday’s trading session.

Reports earlier today indicated that the government is likely to revisit the consolidation among PSU Banks in a push to create larger lenders.

CNBC-TV18 was the first to report about this on July 16, citing sources, that further consolidation among these state-run lenders cannot be ruled out as India is aiming for bigger banks, that are capable of meeting the credit needs of a fast growing economy.CNBC-TV18 had also reported that the government could also consider raising the 20% cap on foreign investment in these state-run banks.

The last major consolidation of public sector banks was carried out in 2020, when the number of banks run by the government were cut down to 12, from 27 earlier, by merging smaller lenders with larger ones.

Shares Union Bank, Indian Bank, Bank of India, Punjab & Sind Bank are trading with gains of over 3%, while Canara Bank, Bank of Maharashtra, PNB and other low float lenders like Indian Overseas Bank, UCO Bank are trading with gains of 2% to 3% each.

(Then CNBC-TV18’s Sapna Das.