Have you ever wondered what happens when you give money to the bank? Or how banks make money? Banks are not just places where we keep our pocket money or savings; they are powerful machines that help the whole country grow.
Today, we’ll take a fun and easy look at Public sector bank stocks in India. We’ll understand why these banks are special, why their profits are going up, but their stock prices aren’t, and whether they might be a good option for investment.
This blog is for everyone — from curious kids to adults who want to learn in a simple way. So, grab your favorite snack and let’s explore!
Understanding public sector banks
Public sector banks are banks that are owned by the government. They are also called government banks. In India, these banks play a big role because they have the trust of millions of people.
Some big names include State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, and Bank of Maharashtra.
These banks have been around for a long time, and people feel safe keeping their money with them. When we talk about Public sector bank stocks in India, we are talking about buying a small piece of these banks so we can share their profits.
How do banks make money?
Banks make money mostly by lending. This means they give loans to people and businesses and charge them interest. For example, if you take a loan to buy a bicycle, you will have to pay back the money with some extra. That extra is called interest, and that’s how banks earn.
Apart from lending, banks also make money from fees and investments. In India, banks have been lending a lot because many businesses and people want to grow and buy new things.
Recent performance of public sector banks
In the past few years, Public sector bank stocks in India have shown strong profits. For example, State Bank of India made ₹70,900 crores in profit! That’s a lot of money.
Bank of Baroda, Punjab National Bank, and Canara Bank also reported high profits. Together, Indian banks earned ₹3.71 lakh crores in the year 2025. This is almost 14 times higher than earlier records!
This shows that our economy is growing strong. Banks act like the nervous system of the body. If they work well, the whole country feels strong and healthy.
Then why aren’t stock prices rising?
Even though profits are growing, the stock prices of many Public sector bank stocks in India are not going up much. Isn’t that strange? Let’s understand why.
For example:
- Punjab National Bank grew its profit by 101%, but its stock price fell by 10%.
- Canara Bank grew profit by 17%, but share price grew only 1.8%.
- State Bank of India grew profit by 16%, but stock price rose only 2.1%.
This is because investors are worried about some hidden problems.
Challenges faced by public sector banks
Loan growth is slowing down
Earlier, banks were giving a lot of loans because everyone wanted to expand. Businesses and people were very confident and borrowed big amounts. But now, loan growth has slowed from 16% to 12%.
When loans slow down, banks can’t earn as much. This makes investors cautious about Public sector bank stocks in India.
CASA is going down
CASA means Current Account and Savings Account. Banks love CASA because they get money at a very low cost from these accounts.
But today, people are investing more in stocks, mutual funds, or other places instead of keeping money in savings. CASA ratios have gone down in most banks. For example:
- Punjab National Bank’s CASA fell from 41% to 37.9%.
- Indian Bank’s CASA fell from 40.77% to 38.7%.
- Union Bank’s CASA fell from 34.20% to 33.52%.
This means banks now need to pay more to get money, which reduces their profit.
Net interest margin (NIM) is falling
NIM is the difference between what banks earn from loans and what they pay to depositors. It’s like if you buy candies for ₹2 and sell them for ₹5, your margin is ₹3.
For banks, margins are shrinking:
- State Bank of India’s NIM fell from 3.8% to 3.09%.
- Punjab National Bank’s NIM fell from 3.09% to 2.93%.
- Indian Bank’s NIM fell from 3.47% to 3.41%.
Lower NIM means lower profit per rupee lent, making investors less excited about Public sector bank stocks in India.
What are banks doing to fix this?
Banks know these problems and are trying hard to fix them. Let’s look at a few big banks.
State Bank of India (SBI)
SBI wants to keep its return on equity above 15% and ROA (Return on Assets) above 1%. It plans to maintain net interest margin around 3% even though there might be some pressure.
Bank of Maharashtra
They have set high goals like keeping NIM at 3.75% and CASA above 50%. They are smaller than SBI, so they have more room to grow quickly.
Bank of Baroda
They are facing the same problems with deposit costs and are trying to focus on new ways to earn, like treasury income and retail loans.
Other banks
Central Bank of India, Canara Bank, and Indian Bank are all being careful. They want to grow slowly and safely, keeping bad loans (NPA) low and profits stable.
Investors’ mood
Investors today are like kids who get bored with old toys and want new ones. They want exciting sectors like renewable energy and electric vehicles (EVs).
This has made Public sector bank stocks in India less attractive for now. But remember, markets work in cycles. What is ignored today might shine tomorrow!
The future of public sector bank stocks in India
In the long run, many experts believe Public sector bank stocks in India can become strong performers. Once the growth stabilizes and problems are handled, prices may rise fast.
Right now, it might feel slow and boring, but long-term investors can consider it an opportunity. Remember, if stock prices fall too much, they might bounce back strongly later.
Why should we care about public sector banks?
Public sector banks do more than make money. They support small businesses, help farmers, give loans to students, and make the whole country stronger. When we understand Public sector bank stocks in India, we understand a big part of our economy.
Also, it teaches us important lessons about patience, cycles, and how business works.
Should you invest?
If you are thinking about investing in Public sector bank stocks in India, always do your own research first. Understand the bank’s plans, their profits, and the risks.
Remember, investing is not like guessing a lucky number; it is about studying and understanding.
You can also join a free webinar on stock market today or a stock market free webinar to learn more.
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Conclusion
Public sector banks are like the backbone of our country’s money system. Even though they are facing challenges, they are still strong and important.
If you are looking at Public sector bank stocks in India, understand the full picture:
- Profits are high but prices are low.
- Growth is slower but steady.
- Problems exist, but solutions are coming.
In the future, when the challenges are handled, Public sector bank stocks in India can surprise everyone with strong returns.
Thank you for reading this fun and simple story about banks. Keep learning, keep exploring, and remember — money is not just about numbers; it’s about stories, patience, and smart thinking!
Final thoughts
Do you like learning about stocks in a simple way? Do you want to understand more about how our economy works? Tell us in the comments!
And always keep reading to become smarter about your money. Happy learning! 🌟
