PSU bank shares surge on Basel III deadline extension

Shares of state-run banks ended with as much as 9 per cent gains after the Reserve Bank of India (RBI) extended deadline for meeting Basel III norms to March 2019.

State Bank of India's scrip surged 3.52 per cent on Friday to settle at Rs 1,904.30 on the Bombay Stock Exchange.

Buying was also seen at counters like Union Bank of India that rallied 9.23 per cent, while Punjab National Bank rose by 6.87 per cent, Allahabad Bank by 5.95 per cent and Bank of Baroda by 5.26 per cent.

Led by the gains in these stocks, the BSE bankex index shot-up by 1.19 per cent to close at 14,585.16.

The central bank had on Thursday extended deadline for banks to implement global capital norms, Basel III, by a year to March 2019 on concerns of potential stresses on the asset quality and profitability of the banks.

"The RBI's deferral of the Basel 3 implementation deadline by a year has eased the pressure on banks to issue hybrid capital in FY15. This is a practical outcome of the current limited investor appetite for such instruments and the new deadlines do not dilute the spirit of Basel 3," said Ananda Bhoumik, senior director, India Ratings & Research.