It said the board of the bank at a meeting held on Monday approved the proposal of issuing equity shares on preferential basis to the government in lieu of the capital infusion.

Share price of public sector banks such as State Bank of India (SBI), Bank of Baroda and Punjab National Bank were up over 2 per cent in the early trade. Private lenders ICICI Bank, Federal Bank, Axis Bank and HDFC Bank also gained over 1 per cent.

On the bank going to qualified institutional buyers (QIBs), he said it would be done next fiscal.

At 2:30 pm, Punjab National Bank stocks traded 4.62 per cent up on BSE. On NSE, PNB stocks rose 5.03 per cent.

Twelve-month earnings projections for members of the S&P BSE India Bankex Index fell 3% last month after the banks published their reports for the year ending 31 March, estimates compiled by Bloomberg show.

As on July 1, banks enrolled about 104 million account holders in the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and the Pradhan Mantri Suraksha Bima Yojana (PMSBY). State Bank of India (SBI) and Punjab National Bank (PNB) led the enrolments with 20 million and 7.8 million, respectively.

The reduction will be effective from June 8, state-owned PNB said in a statement.

The company reported a net profit of Rs.306.56 crore in the March quarter as against Rs.806.35 crore a year ago.

At 1449 hours, CNX PSU Bank index, the largest loser among sectoral indices, was down 1.6% at 3,444 points compared with 0.15% fall in the CNX Nifty and a marginal 0.10% rise in Bank Nifty.

Punjab National Bank, Bank of Baroda, Kotak Mahindra Bank, Canara Bank, Bank of India, Axis Bank, ICICI Bank, HDFC Bank and State Bank of India are up between 2-3%.