Bank stocks in limelight; surge up to 8%

Bank stocks were in limelight on Friday, surging up to 8%, after the government announced plans to infuse fresh capital into state-run lenders.

Shares of Bank of Baroda surged 5.34%, while SBI gained 5.25% on the BSE. SBI was also the top gainer among the BSE 30-stocks.

Union Bank of India climbed 8.06%, Indian Overseas Bank gained 4.54%, Allahabad Bank rose by 4.37% and Bank of India was up 4.09%.

The BSE bank index ended the day 1.68% higher at 21,499.24.

Government today sought Parliament's nod to spend an additional Rs 25,500 crore in the current fiscal, nearly half of which will be spent on capital infusion into state-owned banks to help them overcome the high bad loans situation.

The ministry plans to infuse Rs 12,110 crore as capital in state-owned banks struggling with highest levels of bad debts in 13 years.

"Rs 20,000 crore (capital infusion) would happen as early as possible. It can happen by September after we get approval from Parliament," Financial Services Secretary Hasmukh Adhia told reporters in New Delhi.

The Finance Ministry in a statement said public sector banks (PSBs) as of now are "adequately capitalized" but would need Rs 1,80,000 crore extra capital over the next four years (up to FY 2019).

Of this, the government plans to provide Rs 70,000 crore through budgetary support - Rs 25,000 crore each in current and next fiscal and Rs 10,000 crore each in 2017-18 and 2018-19.

Banks would be required to raise the remaining amount from the market, the statement said.

Meanwhile, in the broader market the BSE Sensex ended the day with a sharp gain of 409.21 points at 28,114.56.