Public sector undertaking (PSU) banks share price
Shares of public sector banks were in focus, with Nifty the PSU Bank index gaining 2 per cent on the National Stock Exchange (NSE) in Wednesday’s intra-day trade after the Union Cabinet on Tuesday post market hours approved an emergency credit guarantee scheme for the aviation and MSME sectors.
Bank of Maharashtra, Canara Bank, Punjab National Bank (PNB), Bank of Baroda (BoB), Indian Bank, UCO Bank and Union Bank of India were up 2 per cent to 3 per cent on the NSE in intra-day trade. State Bank of India (SBI), Central Bank of India and Indian Overseas Bank were up 1 per cent each.
At 09:57 AM on Wednesday, the Nifty PSU Bank index was the top gainer among sectoral indices, up 1.7 per cent, as compared to 0.54 per cent rise in the Nifty 50. However, in the past two weeks, PSU Bank index had underperformed the market and fell 6.3 per cent, as against 2.2 per cent decline in the benchmark index, till Tuesday, May 5, 2026.
What’s driving PSU Banks?
The Cabinet approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide additional credit support to businesses facing liquidity stress due to the West Asia situation, Information and Broadcasting Minister Ashwini Vaishnaw said at a press briefing, the Business Standard reported.
The Union Cabinet approved ECLGS 5.0 with an outlay of ₹18,100 crore to support MSMEs, airlines and other businesses facing higher working capital pressures amid the ongoing West Asia crisis. The scheme is expected to facilitate additional credit flow of ₹2.55 trillion, including a dedicated ₹5,000 crore allocation for the aviation sector.
Under the scheme, MSMEs can avail additional loans up to 20 per cent of peak working capital utilisation (capped at ₹100 crore) with 100 per cent government guarantee, while airlines can borrow up to ₹1,500 crore with a 90 per cent guarantee cover. Loan tenor will be five years with a one-year moratorium for most sectors, while airlines will receive seven-year loans with a two-year moratorium.
Brokerages view on Banks
The scheme is likely to support credit growth and working capital demand across MSME and aviation segments, aided by sovereign backed guarantees that reduce incremental lending risk for banks, ICICI Securities said in a note.
PSU banks and larger lenders with meaningful MSME exposure could see higher loan disbursement opportunities under the scheme. At the same time, the extended moratorium structure and exposure to relatively stressed borrower segments may keep asset quality outcomes and post-moratorium repayment behaviour as key monitorables, particularly amid ongoing geopolitical and macroeconomic uncertainties, the brokerage firm said.
ECLGS 5.0 is likely to be credit and asset quality supportive for banks, in line with outcomes observed under earlier schemes. ECLGS 5.0 supports credit growth with contained downside risk, aiding loan growth year-on-year while limiting slippages and credit costs quarter-on-quarter. The sovereign-backed guarantee structure meaningfully de-risks incremental exposure, particularly in vulnerable segments, analysts at Equirus Securities said in the sector report. ============================================== Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.
