Public sector banking stocks were in sharp focus on June 30 after the Finance Ministry directed state-owned lenders to monetise their stakes in subsidiaries via IPOs or strategic stake sales.
In response to the move, shares of leading PSU banks including Bank of Baroda, Canara Bank, Indian Bank, State Bank of India (SBI), Punjab National Bank (PNB), and Bank of India surged between 1 to 3 percent intraday. All 12 constituents of the Nifty PSU Bank index were trading firmly in the green, in stark contrast to the muted movement seen in the broader Bank Nifty index.
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According to reports, approximately 15 subsidiaries or joint ventures under public sector banks are currently being considered for initial public offerings (IPOs) or strategic divestments in the medium to long term.
Among the most anticipated listings is SBI General Insurance and SBI Payment Services—both potential IPO candidates once their operations reach scale, reports said.
This push for monetisation came during a recent review meeting chaired by the Finance Minister, where heads of PSU banks were also urged to continue the profitability momentum into financial year 2025-26 (FY26).
In FY25, the collective net profit of 12 public sector banks reached a record Rs 1.78 lakh crore, up 26 percent from the previous year. In absolute terms, the profit increase amounted to nearly Rs 37,100 crore year-on-year.
Brokerage house HDFC Securities noted that India's PSU banking space—long viewed as structurally impaired—is showing early signs of a long-term revival, driven by governance reforms, tech-driven transformation, and improving asset quality and earnings.
The brokerage reaffirmed SBI as its top “buy” pick among public sector banks. It also initiated coverage on Bank of Baroda, Indian Bank, and Bank of Maharashtra with “buy” ratings, and rated Canara Bank and Union Bank of India as “add.”
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