On Friday, Finance Minister Nirmala Sitharaman unveiled a mega plan to merge 10 public sector banks into four as part of plans to create fewer and stronger global-sized lenders as it looks to boost economic growth from a six-year low.
As per the proposed merger, Punjab National Bank, Oriental Bank of Commerce and United Bank of India will combine to form the nation's second-largest lender; Canara Bank and Syndicate Bank will merge; Union Bank of India will amalgamate with Andhra Bank and Corporation Bank; and Indian Bank will merge with Allahabad Bank.
The loss in the index was, however, trimmed by the gains logged by weaker PSBs, who would be merged under the proposal.
Shares of United Bank of India rallied up to 15, followed by gains in Andhra Bank, 5.3 per cent, and Syndicate Bank, up 3.5 per cent. Shares of Corporation Bank rallied 18 per cent intra-day, but erased gains to slump 9 per cent during the day before settling 3 per cent lower.
Meanwhile, shares of Bank of India, which has been left out of the merger proposal, dipped up to 3 per cent intra-day. However, Central Bank of India, which too has been left out of the merger proposal, slipped 7.6 per cent during the day.
At 9:50 am, the Nifty PSU Bank index pared some of its losses, and was ruling 2.8 per cent lower at 2,403.80 level. In comparison, the benchmark S&P BSE Sensex were down 380 points, or 1 per cent, at 36,953 level, and the broader Nifty50 was down 112 points, or 1 per cent, at 10,910 mark.
Besides, shares of private banks were trading in the red too. Nine out of 10 private banks, in the Nifty Private Bank index, were trading weak. Shares of ICICI Bank, and Axis Bank slipped up to 2 per cent intra-day, while Federal Bank, IDFC First Bank, IndusInd Bank and HDFC Bank declined around 1 per cent each.