PFC, REC, IREDA, PNB, others decline up to 13%: Why PSU stocks are falling sharply today - explained

This downward inclination followed the Reserve Bank's announcement connected Friday proposing stricter regulations, governing lending to projects nether implementation.

The RBI guidelines stipulate that a 5% wide proviso indispensable beryllium acceptable speech for each existing and caller task loans successful the operation phase, i.e., earlier commercialized operations commence. Once the task transitions to the operational phase, these provisions tin beryllium reduced to 2.5% of the backing outstanding and further to 1% nether definite conditions.

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These conditions see the task demonstrating a affirmative nett operating currency travel capable to screen existent repayment obligations to each lenders, on with a minimum 20% diminution successful the project's full semipermanent indebtedness with lenders from the outstanding magnitude astatine the clip of achieving the Date of Commencement of Commercial Operations.

The projected guidelines besides outline details for accent resolution, specify criteria for upgrading accounts, and invoke recognition. Lenders are expected to support project-specific information successful an physics and easy accessible format, updating immoderate changes successful indebtedness parameters promptly, but wrong 15 days of specified changes, PTI reported. 

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The RBI mandates the implementation of indispensable systems for this intent wrong 3 months of issuing these directives.

Following this update, shares of powerfulness financing companies specified arsenic Power Finance Corporation (PFC) and Rural Electrification Corporation experienced declines of 13% and 13.6%, respectively. Additionally, the shares of IREDA besides saw a important tumble of astir 7%.

In addition, PSU banks witnessed crisp declines successful today's trade, with Canara Bank, Punjab National Bank, Bank of Baroda, and Bank of India falling implicit 5%. The remaining 8 constituents of the scale are besides trading successful antagonistic territory. Overall, the Nifty PSU scale fell 4.3% to 7,202 points.

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At the clip of writing, 54 constituents of the BSE PSU scale were trading successful the red, resulting successful a 3.4% driblet successful the scale to 19,760 points. The scale deed an intraday of debased 19,632 points, down 3.86%. 

Conversely, the RBI has issued guidelines to banks concerning their engagement successful the superior markets, stressing adherence to specified regulations. The caller circular focuses connected "Banks' Exposure to the Capital Market - Issue of Irrevocable Payment Commitments (IPCs)."

This enactment by the RBI follows adjustments successful the colony rhythm introduced by banal exchanges, transitioning from T 2 to T 1 rolling colony for equities. As a result, existing guidelines connected the issuance of IPCs by banks person been reevaluated to guarantee compatibility with the caller colony cycle, arsenic reported by the ANI. 

Disclaimer: We counsel investors to cheque with certified experts earlier taking immoderate concern decisions.

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Published: 06 May 2024, 11:46 AM IST