SEB reforms positive for PNB, Canara Bank: Deutsche Bank

NEW DELHI: Deutsche Bank sees SEB package as significant positive for financial lenders to the power sector, as asset quality risk may abate significantly.

The global bank says the key measures of the package are positive for the financial lenders, mainly PSU Banks as well as REC and PFC. Banks like PNB, Canara and Union Bank of India should benefit the most

Shares exposed to state-owned electricity distributors gained on Tuesday after the government approved a bailout plan for the cash-strapped utilities.

At 09:40 a.m., Power sector lender Power Finance Corp rose 1.5 per cent to Rs 202. Indian lenders with higher exposure to the debt sector also advanced, with Canara Bank up 2.6 percent while Punjab National Bank advanced 0.6 per cent to Rs 826.55.

The Cabinet Committee on Economic Affairs approved restructuring of Rs 1.9 lakh crore debts of state electricity boards, in a move to turnaround the near-bankrupt power distribution companies.

Losses of these state-run distribution firms had threatened the viability of the entire power sector as these entities dominate the distribution network in the country, and are often misused by state governments for political reasons.

The measures announced late on Monday unveiled steps to revive electricity boards which may lead to higher power tariffs, and help state utilities save up to 7,000 crore in interest payment, analysts and officials said.