What is PSU Bank: Definition, Types, List of PSU Banks

What is PSU Bank: PSU Banks are a type of financial institution in which the government holds more than 50% of the total equity. The government also has the authority here to finalize all financial guidelines for the public sector banks. The PSUs operate under the Government regulations to inspire trust among the depositors. 

The State Bank of India is the largest public sector bank in India, in which the Government holds a 57.49% stake. PSU Banks work in the interest of the public by introducing schemes related to the benefit of their customers. In this article, we will discuss all the details associated with PSU Banks.

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What is PSU Bank?

PSU Bank, also known as nationalized banks, are those financial institutions in which the government retains a majority of the shares of the bank with the primary aim of serving the interests of the public.

• The Government of India started to enter the banking business with the nationalization of the Imperial Bank in 1955. RBI acquired 60% of the shares and renamed it as the State Bank of India.

• The Government also nationalized 14 more banks in 1969. By the 1990s, PSU banks started posting huge profits. In the year 2002-03, these banks posted a profit of INR 7780 Crores.

Types of PSU Banks

Public sector banks in India are regulated by the guidelines set by the Reserve Bank of India (RBI). As the majority of stocks in the PSU Banks are owned by the government, these financial institutions offer more public-friendly services. The different types of PSU Banks are listed below:

• Nationalized Banks: These banks were originally owned by private entities, but later on were nationalized by the central government in 1969 and 1980.

• SBI and its Associates: SBI was created in the year 1955 after the nationalization of the Imperial Bank of India. These banks act as the branches of SBI and reach a wider range of the public in India to offer financial services.

• Regional  Rural Banks (RRBs): These financial institutions are jointly owned by the Central Government with 50% shares, the State Government with 15% shares, and the sponsoring bank with 35% shares.

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Functions of PSU Bank

The Public Sector Banks were originally private-owned financial institutions, but were later nationalized by the Central Government in the interest of the general public. The primary aim of these banks is to offer services to the general public. The functions of PSU bank include the following:

• PSU Banks look after the mobilization of public savings.

• It grants all types of loans and advances to the general public.

• The Central Government, with the PSU banks, looks to offer Priority Sector Lending to the public in sectors such as agriculture, MSMEs, education, etc.

• PSU Banks help in the contribution of promoting financial literacy and inclusion.

• It also becomes the nodal agency to implement certain government schemes like PMJDY, PMEGP, Mudra, etc.

• PSU Banks also provide foreign exchange and trade finance services.

PSU Banks List

There are 12 public sector banks currently operating in India. A few years back, the Indian government merged ten public sector banks into four to optimize the functionality of these banks and increase their profits. Check the table below to know details about all the PSU Banks list in India:

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PSU Bank Stocks

PSU Banks are considered a key pillar of the Indian Banking Sector, which is supported by government ownership. Check the table below to know all the details related to PSU Bank Stocks and their market capitalization. This PSU banks list will help in making informed decisions depending on the performance of government-owned banks in India:

PSU Bank in India has long been established as the epitome of inclusive banking in India. Despite the issues and challenges associated with the Public Sector Undertakings, they are crucial for the promotion of government schemes, rural financing, priority sector lending, and financial inclusion.

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