PSU Banks in focus on privatisation buzz: Bank of Maharashtra, BoI jump 20%, up 40% in 2 days

PSU Banks continued to remain in focus on Wednesday, extending gains for the second straight session on reports of privatisation of some lenders. The Nifty PSU Bank index soared 5.5 percent in an otherwise weak market as compared to a half percent decline in benchmarks.

Media reports suggested that the government has shortlisted four mid-sized state-run banks for privatisation. The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India, the report added.

Shares of these 4 PSBs—Bank of Maharashtra, Bank of India, Indian Overseas Bank and Central Bank of India jumped 17-20 percent in intra-day deals.

"Two of those banks will be selected for sale in the FY22 which begins in April. The government, however, will continue to hold a majority stake in India's largest lender State Bank of India, which is seen as a 'strategic bank' for implementing initiatives such as expanding rural credit," the report added.

However, government sources told CNBC-TV18, that the media report of the government shortlisting four mid-sized state-run banks for privatisation was not correct and the government is yet to identify PSBs for privatisation.

Individually, the Bank of Maharashtra and Indian Overseas Bank rallied 20 percent each while the Bank of India soared 18 percent and the Central Bank of India advanced 17 percent. In the past two days, shares of these banks have risen over 40 percent each.

Meanwhile, other PSU banks' stocks also rose with UCO Bank, Union Bank, Indian Bank, Punjab National Bank and J&K Bank up between 5 percent and 9 percent.