In the draft norms issued last month, the RBI said that the ultimate responsibility for the bank's performance, conduct and control rests with the Board
Yes, the entry of private bankers, particularly with global experience will add value to PSBs, points out Tamal Bandyopadhyay.
Public-sector banks (PSBs) in India have reported an 11.2 per cent year-on-year rise in net profit, reaching a record 1.98 trillion in FY26, marking their fourth consecutive year of profitability, driven by sustained business growth, improved asset quality, and strong capital positions.
Led by the country's biggest lender State Bank of India (SBI), public sector banks logged a record cumulative profit of Rs 52,603 crore in the third quarter of the current fiscal, reflecting an 18 per cent year-on-year growth.
The Indian banking sector could be due for a rise in profitability after several quarters of net interest margin (NIM) compression. The Q2FY26 results suggest NIMs have bottomed out.
'What we have to think about is, how to improve the efficiency of public sector banks.' 'You have to make decision-making more prudent, and free from government intervention.'
As per the mega consolidation plan, Oriental Bank of Commerce and United Bank of India will merge into Punjab National Bank (PNB); Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank. Following this merger, PNB will become second largest after the SBI, Canara Bank fourth, Union Bank of India fifth and Indian Bank seventh biggest public sector lender.
Unlike any other national asset, which is typically sold to the highest bidder, the profile of the bidder is the most important criterion for a licence to bank, and even for acquiring more than 5 per cent stake, explains Tamal Bandyopadhyay.
Public-sector lenders Indian Overseas Bank (IOB) and Uco Bank are likely to raise funds through qualified institutional placement (QIP) next month. Punjab & Sind Bank is likely to follow suit later this financial year to meet the public shareholding norm of 25 per cent. When a public-sector unit raises funds through QIP, the money goes to the company because it involves issuing new shares whereas in the case of offer for sale (OFS), the money raised goes to the government because its shares are sold.
Balachandran M, Director of the Institute of Banking Personnel Selection, has little time to catch his breath. He and his team have been supervising recruitment of nearly 100 public sector bank employees every day.
Giving a pat on the back of public sector banks, Finance Minister Pranab Mukherjee on Friday said the Indian banking sector has responded well to difficult global environment by meeting credit needs of the economy.
'We may bite the bullet and draw up plans for privatisation.' 'If that is done now, the sale of the government stake will fetch money; a delay will see erosion in whatever value is left in these banks,' says Tamal Bandyopadhyay.
In the biggest consolidation exercise in the banking space, the government on Friday announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.
Non-Performing Assets are a wake-up call for public sector banks.
Public-sector banks (PSBs) have reported a substantial increase in non-interest income for Q1FY27, primarily driven by the sale of Priority Sector Lending Certificates (PSLCs) backed by their rapidly expanding gold loan portfolios. This strategy has allowed several lenders to book significant profits by exceeding priority sector lending targets.
'Public sector banks are like an extended arm of the government.' 'They rush to rescue certain sectors or they rush to invest in certain sectors to prop up the economy which the private banks don't.'
Typically, those from the IIMs, Xavier Labour Relations Institute and Indian School of Business joined at Scale III, but graduates from other B-schools were recruited in scale II.
The finance ministry is not only keen to split the roles of CMD, but also wants to appoint them for a fixed tenure of five years.
Public sector banks in India are increasing their IT spending to bolster cybersecurity measures in response to concerns about Anthropic's Claude Mythos AI tool and its potential to exploit vulnerabilities in financial systems.
A new report by FICCI, BCG, and IBA outlines that India's banking sector must grow significantly faster than nominal GDP to support a USD 30 trillion economy by 2047, requiring banking assets of USD 45 trillion. The report highlights the sector's current strength, challenges in digitisation, and the need to enhance resilience against fraud and cyber threats, proposing a 13-point agenda for stakeholders.
Out of the 12 executive directors announced on Wednesday, five will fill vacancies with immediate effect, while the remaining will be promoted as and when posts are vacant.
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Privatising public sector companies would have encountered significant opposition from their managers as well as from strong unions.
Normal banking operations like cheque clearance in public sector banks across the country are likely to be hit on Wednesday as employees have decided to go on one-day nation-wide strike to press for wage revision.
Public sector banks' cumulative profit crossed the Rs 1 lakh crore-mark in the financial year ended March 2023, with market leader State Bank of India (SBI) accounting for nearly half of the total earnings. From posting a total net loss of Rs 85,390 crore in 2017-18, the Public Sector Banks (PSBs) have come a long way as their profit touched Rs 1,04,649 crore in 2022-23, according to an analysis of their financial results. These 12 PSBs witnessed 57 per cent increase in total profit compared to Rs 66,539.98 crore earned in 2021-22.
This is part of the first batch of Supplementary Demands for Grants for 2020-21 moved by Finance Minister Nirmala Sitharaman in the Lok Sabha.
The need to allow government shareholding in public sector banks to come down below 51 per cent
Department of financial services secretary Sanjay Malhotra held a meeting with heads of PSBs, insurance companies and financial institutions for identifying ways to support Agniveers on completion of their tenure of duty.
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At the retreat, PSBs had suggested the government cut its stake in these entities to less than 51 per cent over a period of time and empower the boards of individual banks.
The inefficient public sector with higher costs offers a lobbying cover for the entire sector, which confers even greater benefits on the private sector.
The appointments in 2009-10 would include the CMDs of Syndicate Bank, Bank of India and United Bank of India, sources said. These appointments will be there because of vacancy arising on account of superannuation of the existing chiefs, sources said.
A sophisticated cross-bank syndicate is systematically defrauding non-resident Indians (NRIs) and elderly citizens by exploiting their fixed deposits through forged documents and fictitious loans, often involving colluding bank employees and real estate deals.
Ironically, bad loans and non-performing assets are on the rise in public sector banks in India, say sector watchers.
A Bank Investment Company to act as a holding company for state-owned banks would go a long way in minimising government interference and improving governance.
The move comes amid growing demand from organisations in India for local access to Claude.
The Rajya Sabha has passed The Bankers' Books Evidence Bill, 2026, which aims to replace a British-era law and allow digital and virtual records to be admissible as evidence in courts. This legislation aligns with contemporary digital banking practices and extends a uniform evidential framework to various financial entities, including NBFCs and fintech companies. Finance Minister Nirmala Sitharaman highlighted the bill's role in strengthening public confidence and safeguarding customer privacy. The bill's passage, however, saw an Opposition walkout over unrelated issues.
State Bank of India and IDBI Bank have decided not to go to the IIMs this year.
Public resources are scarce and need to be used well.
DIIs invested $22.8 billion in Indian equities in Q2CY26.
The banking sector's credibility is on thin ice. Unless the government takes strict steps, things could get worse.
The asymmetry in deposit and credit growth is the biggest challenge before the Indian banking industry. For every 100 deposit that a bank mobilises, it needs to keep 3 with the banking regulator in the form of cash reserve ratio on which it doesn't earn any interest. Another 18 is used for buying government bonds (statutory liquidity ratio). This means, a bank is left with 79 for giving credit. Add to this, its capital which can be used for giving loans. Most banks are facing a fund crunch. They need to find ways to attract deposits if they want to sustain credit growth, explains Tamal Bandyopadhyay.
