business

Updated: Sep 03, 2019 14:56 IST

Shares of public sector banks (PSBs) traded under pressure on Tuesday after the government last week unveiled a mega-plan to merge 10 of them for creating four stronger lenders with countrywide networks and global reach.

Finance Minister Nirmala Sitharaman announced that Punjab National Bank, Oriental Bank of Commerce and United Bank of India will be merged.

The combined entity will be the second-largest PSB bank in India second-largest lender after State Bank of India with a business of Rs 17.95 lakh crore. It will have a second-largest banking network in the country with 11,437 branches.

However, Nifty PSU bank dropped by 3.76 per cent around noon on Tuesday to 2,381.30. Stocks of Punjab National Bank plunged by 7.78 per cent around to trade at Rs 59.90 per share. United Bank of India was down by 6.28 per cent and Oriental Bank of Commerce edged lower by 4.9 per cent.

Similarly, Canara Bank traded 7.73 per cent lower to trade at Rs 203.50 per share. Canara Bank is set to merge with Syndicate Bank, Union Bank of India will amalgamate with Andhra Bank, and Corporation Bank and Indian Bank will merge with Allahabad Bank.

The stock market was also impacted negatively by June quarter GDP data which showed the country’s growth rate slumped to hit a low of 5 per cent compared to 8 per cent in Q1 of the previous fiscal year.

The slowdown was largely due to a sharp dip in the manufacturing sector and agriculture output. Economists say that consumer demand and private investment have weakened amid global trade frictions and dampening business sentiment.

On Monday, the government reported that growth of eight core industries declined to 2.1 per cent against 7.3 per cent growth in the same period of last year.

(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)