The Indian banking system largely consists of public sector banks, private sector banks, and foreign banks, in addition to cooperative credit institutions.
Access to the banking system has improved over the years due to persistent effort from the Government to promote banking technology and promote expansion in unbanked and metropolitan regions.
If you look at the history of the financial world over the last 50-60 years, you will see there was hardly any innovation. This is because traditionally the banking sector is very slow to adopt new technologies.
However, with the rise of disruptive technologies like artificial intelligence (AI), machine learning, and blockchain, the industry is now at the forefront of technological innovation.
Due to this, the banking sector will undergo a massive transformation in the coming years. And the fastest growing entities will possibly be the ones that adapt to this change without compromising on the core of margins and asset quality.
Many banks are investing heavily in their own technology and other startups to catch up with non-banks in the digital banking space.
To draw a stark comparison between PSU and private sector banks, public sector banks in India have suffered poor valuations for decades. At the turn of every economic cycle, these entities are forced to lend vigorously. They even lend to corporates with poor balance sheets.
Their private peers, on the other hand, have stayed ahead and invested in technology to keep up with the changing dynamics. They have showed consistency in lending quality, NPA provisions and profit growth.
As things stand now, the government is employing capital expenditure programs to boost demand. The key is to stimulate growth via a long-term capex measure.
This massive capital outlay bodes well for banks in general. However, the PSU banks are at a slight advantage.
Further, the opportunities are not just limited to the big PSU banks. Even their smaller counterparts can make a breakthrough and get recognized.
If the smaller PSU banks do have a major impact in the future, they could potentially turn into future bluechips.
Here are some of the public sector bank penny stocks to add to your watchlist.
For the entire list of PSU banking stocks, check out our list of PSU banks.
Mar 15, 2024
This five public sector lenders are planning to reduce government stake to less than 75% to comply with MPS norms. More details inside.
Feb 10, 2024
This PSU bank will be carrying out its first ever stock split if it gets approved later this month.
Feb 8, 2024
Yes Bank shares hit their highest level since June 2020, surging 43% in three days. What's driving the rally?
Jan 26, 2024
The ability for banks like Union Bank of India and Canara Bank to manage their NIMs would be key, given that the rate easing cycle is still 6-9 months away.
Nov 15, 2023
Shares of PNB have surged around 80% in a year. The stock is currently trading very close to 52-week high. Let's explore the reasons driving this rally.
Oct 4, 2023
What's next for the stock of IOB? Find out...
Sep 18, 2023
This multibagger banking stock zooms 27% in five days. Find out what next for this PSU bank.
Jul 13, 2023
The overall sentiment in the PSU banking sector is bullish, and South Indian Bank has resumed its upward momentum after breaking out of a rectangle pattern.
Jun 7, 2023
With Sky High Valuations, is it Time to Relook at the Capital Goods Sector.
May 19, 2023
After reporting highest ever quarterly profit, shares of SBI have encountered a roadblock due to these reasons.
Mar 15, 2024
The entire bunch of PSU stocks saw a steep fall earlier this week on Wednesday, marking one of its worst days since the pandemic.
Feb 10, 2024
With strong credit growth and cleaner balance sheets, the best PSU bank stocks could see more upside in the medium term.
Feb 7, 2024
Shares of this PSU bank zoomed 13% today and hit their 52-week high. What's driving the rally?
Dec 27, 2023
Shares of the third largest PSU bank in the country touched their 52 week high today. Here's why.
Oct 28, 2023
The ability of these two PSU banks to effectively manage a rising interest rate scenario is commendable.
Sep 22, 2023
How to trade PSU banking stocks now.
Jul 25, 2023
In the past few days, two PSU banks have reported strong operational performance. Find out more details inside.
Jul 6, 2023
What do the charts say about PSU banking stocks? Find out...
Jun 1, 2023
Due to sky high valuations, what should you do with these stocks?
May 9, 2023
Most banks have reported a superlative performance in the quarter ended March 2023. What about Canara Bank?