SBI, Canara Bank, UCO Bank: Public sector banks in the spotlight; here is why

The rally in the government-owned banks' names came following the Financial Services Secretary M Nagaraju's statement on Saturday that the public sector banks (PSBs) have transitioned from a phase of survival and stability and are now positioned to play a larger role as champions of growth, innovation, and leadership in the journey towards Viksit Bharat 2047.

Addressing the two-day PSB Manthan, which concluded on Saturday, Nagaraju also highlighted the need for PSBs to aspire to global competitiveness, strengthen governance and operational resilience, and expand their role as sectoral champions across both traditional and emerging industries.

PSB Manthan 2025, organised by the Department of Financial Services (DFS), is themed around reimagining public sector banking for a developed India. The event brought together senior leadership of public sector banks, regulators, industry experts, academicians, technologists, and banking practitioners.

The programme featured discussions on customer experience, governance, innovation, credit growth, risk management, and technology modernisation.

Key suggestions included adopting next-generation technologies, building common infrastructure, and designing hyper-personalised products, the finance ministry said in a statement on Saturday.

The discussions stressed the importance of modernising PSB technology by moving beyond legacy systems to agile and interoperable platforms capable of delivering seamless digital services, enhancing cyber resilience, and integrating effectively with India's digital public infrastructure, it said.

It was further suggested that public sector banks put in place robust governance frameworks for Artificial Intelligence (AI), aimed at strengthening model risk management, nurturing responsible AI adoption, and instituting appropriate safeguards against emerging risks, it said.

The deliberations also underscored the importance of engaging with technology partners who ensure openness and interoperability, thereby avoiding vendor lock-in and enabling long-term flexibility and innovation, it added.

Speakers highlighted the need for collaboration with fintechs, academia, and entrepreneurs to enhance public sector banks' capabilities and accelerate innovation.

They reaffirmed the banks' central role in financial inclusion and national priorities, particularly in sectors like agriculture, MSMEs, housing, and infrastructure, as well as emerging sectors such as renewable energy and digital industries.

In the late morning deals, SBI shares were trading 0.12% higher at ₹824.50, while Indian Overseas Bank was up over 1% at ₹39.90.

UCO Bank shares were trading at ₹29.37 apiece on the NSE, up 1.31%. Punjab National Bank (PNB) shares were up 0.57% at ₹107.92 apiece.

PSBs' Q1 FY26 Review

In August 2025, the finance ministry held a meeting of heads of public sector banks (PSBs) to review their first-quarter financial performance.

The three-hour-long meeting was chaired by Financial Services Secretary M Nagaraju.

During the meeting, the secretary urged the MDs and CEOs of state-owned banks to increase lending towards the productive sector of the economy, according to sources.

The review meeting with public sector banks assessed the performance of the first quarter of 2025-26.

Led by State Bank of India (SBI), public sector banks, cumulatively, logged a record profit of ₹44,218 crore in the first quarter of the current fiscal year (Q1 FY26), with an 11% year-on-year (YoY) growth.

All 12 public sector banks together made a profit of ₹39,974 crore in the June quarter of FY25. The increase in profit in absolute terms was ₹4,244 crore.

Market leader SBI alone contributed 43% to the total earnings of ₹44,218 crore, as per the published numbers on stock exchanges.

SBI logged a net profit of ₹19,160 crore in Q1 FY26, 12% higher than the same period of the previous fiscal year. In terms of size and profits, the biggest lender in the nation still controls the public banking market.

In percentage terms, Chennai-based Indian Overseas Bank reported the highest net profit growth of 76% to ₹1,111 crore, followed by Punjab & Sind Bank with a 48% rise to ₹269 crore.