SBI, Canara Bank, Indian Bank rally as govt plans foreign investment boost
Public sector bank (PSU) stocks saw a sharp rally on Wednesday, September 24, 2025, after reports suggested that the government is considering raising foreign investment limits in state-owned banks. The move, if approved, could increase the current cap of 20% to as high as 49%, while ensuring the government retains majority control with over 51% stake.
This proposal, seen as a major policy reform, is expected to attract significant foreign capital into the banking sector. As a result, the Nifty PSU Bank index jumped over 1.5% to hit a new one-year high of 7,567.50, surpassing its previous peak of 7,473.
SBI, Canara Bank, Indian Bank lead gains
India’s largest lender, State Bank of India (SBI), rose 1.13% to touch a fresh 52-week high of ₹880.50 on the NSE. Canara Bank surged over 2% to ₹124.55, while Indian Bank rallied nearly 3.8% to ₹722, both marking their one-year highs.
Other PSU lenders such as Bank of Baroda, Indian Overseas Bank, Bank of India, and Punjab & Sind Bank also gained in trade. However, Maharashtra Bank, Union Bank of India, and Punjab National Bank came off their highs and ended in the red.
Positive growth outlook ahead of Q2 results
Brokerages noted that PSU banks are showing healthy loan growth guidance along with stable asset quality. Bank of Baroda expects strong quarter-on-quarter (QoQ) loan growth of around 4%, while PNB, Canara Bank, and Indian Bank are guiding for around 2.5% QoQ growth. SBI is expected to deliver 3% QoQ loan growth.
On margins, PSU banks may see a slight dip. For instance, PNB and BoB expect flat margins, while Indian Bank and Union Bank are likely to see small declines. Canara Bank may face more pressure due to lower CASA levels. Still, analysts believe SBI, PNB, and BoB will report relatively strong return on assets (RoA).
