Shares of Bank of Baroda fell as much as 4.1 per cent to Rs 131.35, in their sharpest intraday fall since May 16, as the government is considering the merger of at least four state-run banks.
According to a media report, the government is considering the merger of at least four state-run banks - Bank of Baroda, IDBI Bank Ltd, Oriental Bank of Commerce Ltd and Central Bank of India Ltd.
“Big banks like Bank of Baroda, SBI already have a lot of stress and when these small banks like IDBI Bank are merged with the big ones, that would put a lot of pressure on them and it's a big negative for the stock,” says Yuvraj Choudhary, an analyst at Mumbai-based brokerage Anand Rathi.
Shares of IDBI Bank, which has the worst bad-loan ratio among all Indian lenders, were down 0.5 per cent, while Oriental Bank of Commerce and Central Bank of India were up over 0.5 per cent each. Bank of Baroda has fallen nearly 15 per cent this year as of Friday.
India's banks, burdened by Rs 9.5 lakh crore ($141.64 billion) of bad loans at the end of 2017, saw a further surge in bad loans in March quarter after the central bank withdrew half a dozen restructuring schemes and tightened other rules.