The Nifty PSU Bank index ended its three-day losing streak on June 20, rising over 1 percent. This gain followed the Reserve Bank of India (RBI) releasing final guidelines on project finance loans that were less strict than earlier drafts.
All 11 stocks in the Nifty PSU Bank index closed higher. Shares of state-owned banks like Central Bank, Union Bank, Canara Bank, Indian Overseas Bank, Bank of Baroda, and SBI rose by up to 2 percent during the day.
The new RBI norms lower the capital requirements for banks and non-banking financial companies (NBFCs) on infrastructure and real estate project loans. This move frees up capital, allowing lenders to extend more credit and improves their profitability.
Analysts at Emkay Global said large public sector banks would benefit the most from the changes. They described the RBI’s final guidelines as “pragmatic” because they significantly reduce the provisioning burden on banks.
Public sector banks have also shown strong financial results. Together, all 12 PSU banks reported a record combined net profit of Rs 1.78 lakh crore in FY25, up 26 percent from Rs 1.41 lakh crore in FY24. SBI led the group, contributing over 40 percent of the total earnings.
Punjab National Bank posted the highest profit growth among individual banks, with net earnings more than doubling to Rs 16,630 crore, a 102 percent increase year-on-year. Punjab & Sind Bank also saw a strong 71 percent rise in profit, reaching Rs 1,016 crore.
Over the past three months, the Nifty PSU Bank index has gained 12 percent, outperforming the Nifty 50, which rose 7 percent during the same period.
