PSU Bank Shares or PSU Bank is a common type of government-owned bank in India. Either the Ministry of Finance of the Central Government of India or the Ministries of Finance of various State Governments owning a majority stake of these banks (i.e. more than 50%). There is 12 PSU Bank which I am going to discuss through this post along with their shareholdings.
Frequently asked questions
It is an undertaking over which the government has direct or indirect control through ownership, financial participation, or the rules governing it.
The Central Public Sector Undertakings in India are around 277.
PSUs give the government (their controlling shareholder) the ability to engage directly or indirectly in the economy. So that they could achieve targeted socio-economic goals and optimize long-term aims.
The Indian Ordnance Factory is the largest run industrial undertaking in the country.
The five major functions of the public sector are- 1)Increasing Private-Sector Competition
2) Property Rights Definition and Enforcement. 3)Providing Public Goods is a term used to describe the process of providing services. 4)Negative externalities and how to deal with them. 5) Income is redistributed.
The three organs of public sectors are Legislative (which makes the law), Executive (which enforces the law ), and Judiciary.
Currently, there are 12 major Public Sector Banks in India.
Definition of PSU Bank Shares
There are so many listed banks on the share market. Most of the shares of these banks have owned the government of India. The Ministry of Finance of the Government of India also held more than 50% of the shares. The various State Governments of India also had the ownership of such shares. It includes all the small-cap and big-cap banks of India.
PSU includes all the sectors such as law enforcement, the military, public roadways, public transportation, public education, as well as bank sectors. Public companies and NGOs are similar to government organizations because they supply programs, goods, or services.
What are the advantages of PSU Banks?
- Public sector undertaking banks gives high-interest rate on deposits but low interest charge on loans.
- Here the Employees get full job security. Hence, chance of mis-selling is less while account opening.
- They Offer service to a large customer base.
- Offer their service to various parts of the country.
What are the best PSU Bank Shares to buy now (2021)
Here, the list we have shared below shows the best PSU Bank Shares (public undertaking Banks) of India. Its government shareholding, and its headquarters. These 10 banks also have the highest government shareholding.
These are the major Public Undertaking Banks of India which contains more than 50% of shareholding by the governments of India.
The best PSU Bank Shares details along with its golden and death crossover of listed banks.
Here we are going to discuss the PSU Bank Share which has recently held its moving average golden or death crossover in the trade market. Such as,
Punjab Bank of India
Punjab National Bank also named PNB is a state-owned bank in India. New Delhi, India, is the company’s headquarters. The Ministry of Finance of the Government of India has owned the share. The bank was established in 1894. It is now India’s second-largest government bank. It has owned in terms of both business volume and network. There are more than 180 million customers, 12,248 branches, and 13,248 ATMs of this bank. The government shareholding of this bank is 83.06%.
Here, the chart showing the golden crossover of Punjab National Bank. This is clearly visible how the blue line crosses the red line as well as it is clearly marked with the red upward arrow.
State Bank of India
The State Bank of India or SBI is an Indian multinational public sector bank. It is a legal institution that provides financial services. It is based in Mumbai, Maharashtra. Since the beginning, SBI is the world’s 43rd largest bank. Not only that, it is the only Indian bank in the Fortune Global 500 list of the world’s largest firms in 2020. With a market share of 23%, it is India’s largest public sector bank. As well as the government shareholding of SBIN is 56.92%.
Here, in this image, it is clear that SBIN went through a golden crossover.
UCO Bank, originally United Commercial Bank, is a significant government-owned bank. Its headquartered in Kolkata. It was formed in 1943. The Indian government’s Ministry of Finance owned the bank. Its entire revenue was 3.24 lakh crore in FY 2020–21. Since the beginning, it is in India’s Fortune 500 lists in 2020. It is placed in number 80 there. As well as In Forbes’ Global 2000 list for the year 2018, UCO Bank was rated 48th. Not only this but also the government shareholding of UCO Bank is 94.44%.
In the below chart, we can see that UCO bank went through Death crossover as well as Golden crossover. The blue line crossing above the red line is showing the golden cross. Whereas the blue line crossing below the red line is showing the death cross.
Bank of Baroda
Bank of Baroda also named BOB is a banking and financial services corporation. The Indian government owns the shares. The Government of India’s Ministry of Finance has owned the bank. This bank holds 132 million customers as well as a total revenue of US$218 billion. The bank has a global footprint of 100 abroad locations. It is India’s third-largest government-owned bank. It has a shareholding of 71.60% of the government.
In the given chart it is clearly visible that Bank of Baroda has gone through the golden crossover. The green arrow also shows the point of crossover in this chart.
Canara Bank is one of India’s largest state-owned banks. The Government of India’s Ministry of Finance owned the bank shares. Bengaluru is the company’s headquarter. It was established in Mangalore in 1906 and the founder is Ammembal Subba Rao Pai. Since the Bank was nationalized in 1969. The government owns the shareholding. The government shareholding of this bank is 69.33%.
Through this chart, the death crossover of Canara Bank is clearly visible. The downward arrow shows it clearly.
Union Bank of India or UBI is an Indian government-owned bank. It has more than 120 million customers and also a total business of US$106 billion. The Ministry of Finance owned the bank share. The Union Bank has more than 9500 branches. The combined business became the sixth-largest PSU bank in terms of the branch network. The Government held an 89.07% share of this bank.
The below chart is showing, Union bank was going through a downtrend trend earlier. Not only that a golden crossover also happened after that where the upward arrow is placed.
Bank of India
The Bank of India (BOI) is a government-owned financial institution in India. The owner of the bank is the Indian government’s Ministry of Finance. The headquarters is in Mumbai’s Bandra Kurla Complex. Since its nationalization in 1969, the government has held the shareholding Since March 31, 2019. The Bank of India had 5,316 branches. It also includes 56 operations outside of India. The government shareholding of the Bank of India is 81.87%.
In this chart, it is quite visible that the death cross hit the Bank of India like a mountain slope. The death crossover took place a few months after the golden cross.
Indian Bank is a financial service as well as a banking corporation. The Indian government controls it. India’s Ministry of Finance takes the bank’s ownership. The bank was founded in 1907 and is based in Chennai. It has approx 41,620 workers, 6,004 branches, 5,428 ATMs, and Cash Deposit Machines. It serves more than 100 million customers. The bank is one of India’s top-performing public sector banks. The government shareholding of this bank is 88.06%.
The below chart is showing how Indian Bank went through golden crossover as well as Death crossover too. The beginning shows a drastic golden crossover but after that the death crossover also hits the Bank.
The Central Bank of India (CBI) is a government-owned bank in India. Since it is one of the oldest and the largest government-owned commercial banks in India. The Ministry of Finance owned the Bank. The bank is headquartered in Mumbai also known as India’s financial hub as well as the state capital of Maharashtra. According to various sources, it is one of the two banks that the Ministry of Finance has proposed for privatization. The government shareholding of this bank is 81.91%.
Indian Overseas Bank
The Indian Overseas Bank (IOB) is a large bank in India that comes under the central finance ministry. It has more than 3,400 national branches as well as 6 foreign branches. They also have a representative office in Chennai, India. M. Ct. M. Chidambaram Chettiar founded it in February 1937. They mainly focus on two goals which are foreign exchange trading and overseas banking. The government shareholding of this bank is 96.06%.
In the given chart, a golden crossover of the Indian bank is quite visible. We can see the blue line is crossing the red line which shows the rising of the uptrend.
Among the listed banks the top three PSU Bank shares of India
- State Bank Of India is in the first position
- Indian overseas Bank at the second
- Punjab National Bank is at the 3rd most valuable PSU bank shares.
Here, in Screener.in you can see these three banks are at the top of the PSU bank list as we did their peer comparison. As soon as I write the name SBIN the peer comparison popped up on the screener.in.
The reason why SBIN is the best PSU Bank?
The shares of SBIN (State Bank of India) have risen over 3% since the last few sessions and now trade at Rs 200 per share.
“SBI is government-owned. It gives speedier financial transmission, The other PSU banks were unable to keep their ground and have lost market share to private-sector lenders, SBI has so far resisted. SBI has kept its place over CASA, overall loans, and deposits throughout the last few years.
The Yes Bank was reorganized early this year by the State Bank of India, India’s largest financial institution.
SBIN has the largest customer base 44.89 crores which is the best part of the bank. It has a branch of 22,141. The State Bank of India (SBI) is an Indian multinational public sector bank. This is a legal institution that provides financial services. It is based in Mumbai, Maharashtra. Since the beginning, SBI is the world’s 43rd largest bank. Not only this but also it is the only Indian bank in the Fortune Global 500 list of the world’s largest firms in 2020. With a market share of 23%, this is India’s largest public sector bank. As well as the government shareholding of SBIN is 56.92%.
For all these reasons, according to me the best PSU bank share in 2021 is SBIN.
The difference between public sector undertaken (PSU) and private sector banks
|PARAMETER OF COMPARISON||PUBLIC SECTOR||PRIVATE SECTOR|
|Status of control||PSU is government control.||The private sector is under private individual control.|
|Interest rate||They have higher interest rates for loans but lower interest rates for savings.||They have lower interest rates whereas higher interest rates are for savings.|
|Shareholding||These are financial institutions with a maximum of their shares contained by the government.||These are financial institutions with a maximum of their shares contained by the government.|
|Customer base||Most public sector or government banks get benefits from more than an extensive customer base.|
this happens because people generally find public sector banks more trustworthy.
|Most of the private sector banks experience less customer base.|
The reason is people somehow fail to gain trust in these banks.
|Employee promotion status||Employees in public sector banks are often promoted based on seniority, length of service, and experience.||the promotion of employees in the private sector is generally based on the amount of value added by the employee to the companies.|
PSU Bank shares are now rising for 5 reasons
It’s no news that India’s state-owned banks are in a financial crisis. The price of PSU bank shares has fallen as a result of this. Investors, on the other hand, preferred private banks.
Since demonetization, though, the trend has reversed. Since 2017 till date, the Nifty PSU Bank index has decreased by 18 percent. Prime Minister Narendra Modi announced the demonetization of the 500 and 1000 rupee currencies on November 8, 2016. Major public sector lenders’ stocks outperformed the index, including SBI, Bank of India, and Bank of Baroda for the next few months after that.
Deposits are increasing:
Without capital, no bank can function. This is the money that will assist the company in making a profit. Because of the huge amount of problematic loans, PSU banks have been short on capital. Banks lose money when borrowers fail to repay their debts. Deposits from bank customers help to boost the bank’s capital at such periods. Cash worth millions and crores of rupees were approved as a result of the move.
Openings for new accounts:
It’s usually a good thing when you have more business. This usually means that banks will be able to open more accounts. After demonetization, everyone had to deposit the old 500 and 1,000 rupee notes before withdrawing the cash. It wasn’t a regular transaction. Since then, many people who had never had a bank account had to open new ones. Between November 8 and November 30 of the year 2016, banks opened roughly 30 lakh new accounts.
Jan Dhan accounts can be activated in the following ways:
Prime Minister Narendra Modi started the Jan Dhan initiative in August 2014. Because he wanted to promote bank penetration in India. The goal was to attract the unbanked to join the system. Despite that Millions of new accounts were opened, the majority of them remained dormant. This wasn’t a promising warning. However, till we got the news, only 23% of all Jan Dhan accounts now have a balance of zero.
CASA Ratio Increased:
More accounts and deposits in a savings account are opened after the CASA ratio of the bank rises. Current And Savings Account (CASA) is a term that refers to both a current and a savings account. It measures the percentage of a bank’s total deposits kept. Because the deposit rate paid on these deposits is substantially lower than that on fixed deposits. They are low-cost sources of cash for banks.
Interest rates are falling:
This is pure economics: when the quantity of money grows, the price of money decreases. In this scenario, it means lower interest rates. Bank has already reduced the deposit rates. Accordingly, current rates range from 5.5 percent to 7.6%. For banks. This means lower costs. Furthermore, lending rates may fall. This is because banks now have the capacity to pass on the RBI’s interest rate changes.
PSU gives the government a lot of power. Not only power but also helps in the growth of the country’s economy. Because they are the greatest commercial companies. Not only this but also the main motive is to achieve the targeted socioeconomic goals, either directly or indirectly. The public sector is about to undergo a significant transformation. The government will become more selective in its coverage operations as well as concentrating its spending on critical high-tech necessary infrastructure. The government has also stated that the public sector cannot repair itself as well as it must rely on government budgetary assistance. Privatization has emerged as the most powerful tool in the government’s weapons for bringing efficiency in the public undertaking.