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PSU Bank Penny Stocks

The Indian banking system largely consists of public sector banksprivate 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.

#1 UCO Bank

#2 Bank of India

#3 Bank of Maharashtra

#4 Central Bank of India

#5 Indian Overseas Bank

#6 Punjab & Sind Bank

#7 Union Bank of India

For the entire list of PSU banking stocks, check out our list of PSU banks.

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