State-run banks on the exchanges traded on a weak note during the early trade on Tuesday after the government announced plans to merge 10 public sector banks into four.
Punjab National Bank which will be merged with the Oriental Bank of Commerce and United Bank of India, fell over 7 per cent, the most among the state-run banks constituting the PSU Bank Nifty index.
Oriental Bank of Commerce was trading nearly 5 per cent lower.
Canara Bank was down over 6 per cent but Syndicate Bank was trading nearly 1 per cent higher.
Both the banks are set to be merged into one.
Union Bank of India fell nearly 6 per cent. It will amalgamate with Andhra Bank and Corporation Bank.
Indian Bank slipped nearly 6 per cent, and Allahabad Bank fell, which it is set to merge with, declined over 2 per cent.
Earlier the government had also announced upfront capital infusion of Rs 70,000 crore into the public sectors banks.