Fundwire

Fund managers still prefer private sector banks

Mega recapitalisation of PSU banks has not been able to build enough confidence in fund managers

Fund managers still prefer private sector banks

Late last month when the government announced its plan to inject Rs 2.1 lakh crore in public sector banks, shares of PSU banks shot up by 20-25 percent in a single session. This also benefited investors in equity funds with significant PSU bank exposure. Saddled with non-performing assets (NPA) and provisions, PSU banks have so far been constrained when it comes to lending. In the absence of credit growth, earnings have also been poor. Apart from the leap in share prices the recapitalisation move also helped improve sentiments towards these government-controlled lenders. Value Research spoke to top fund managers to understand the significance and impact of this move. The common strain during the discussions was that most of them favour private sector banks over their PSU counterparts and not without good reason.


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