Shares of public sector banks (PSBs) such as State Bank of India (SBI), Canara Bank, Punjab National Bank (PNB), Central Bank of India, and Bank of Maharashtra opened on a strong note Monday, after the finance ministry directed state-run lenders to explore monetising subsidiaries via IPOs or strategic stake sales in the medium to long term.

SBI share price was up 0.86 per cent at Rs 812.30

Canara Bank stock rose 1.72 per cent to Rs 112.89

PNB stock gained 1.65 per cent, quoting at Rs 108.09

Central Bank of India advanced 1.71 per cent to Rs 39.87

Bank of Maharashtra led the gains, surging 2.06 per cent to Rs 55.42

The government’s directive aims to help PSU banks unlock value from their non-core assets by scaling up operations in subsidiaries and joint ventures, followed by stock exchange listings to maximise returns.

According to a PTI report citing sources, around 15 subsidiaries and JVs of PSBs have been identified for potential listing. The move aligns with broader efforts to enhance governance, operational efficiency, and professional decision-making within public sector institutions.

Among the notable cases, SBI may list SBI General Insurance and SBI Payment Services in the coming years. SBI General Insurance posted a net profit of Rs 509 crore in FY25. SBI’s stake in the firm was slightly reduced to 68.99 per cent after fresh share allotments. SBI Payments, one of India’s largest merchant acquiring platforms, had 33.10 lakh payment touchpoints, including 13.67 lakh POS machines as of March 2024.

Canara Bank, meanwhile, has begun the process to list Canara Robeco AMC and is planning to offload a 14.5 per cent stake in its life insurance JV, Canara HSBC Life Insurance.

The renewed investor interest in PSU banks also follows Finance Minister Nirmala Sitharaman’s June 27 review meeting, where she urged PSBs to boost credit growth post the RBI’s 50 basis point rate cut earlier this month. She also asked banks to sustain their FY25 record profit of Rs 1.78 lakh crore, which marked a 26 per cent increase over the previous fiscal.

The FM’s guidance includes a focus on low-cost deposit mobilisation, maintaining asset quality, and supporting productive sector lending to drive economic growth.

The Nifty PSU Bank Index has climbed 2.8 per cent over the past five sessions and 7.26 per cent in the last six months, underlining growing market optimism on public sector lenders. With IPO pipelines, policy support, and margin resilience, PSU bank stocks like SBI, Canara Bank, and PNB are expected to remain in focus.