Public Sector Banks in India, 2026 List, Headquarter, Merger

Public Sector Banks (PSBs) are the backbone of India’s banking system because the Government of India holds more than 51% ownership in these banks. They play a major role in financial inclusion, credit delivery, savings mobilisation and implementation of government welfare schemes. Over the years, banking reforms, mergers, better governance and digital transformation have made Public Sector Banks in India financially stronger. During FY 2025-26, they recorded historic profits, improved asset quality and continued supporting India’s economic growth through lending to agriculture, MSMEs, infrastructure and retail sectors.

What are Public Sector Banks?

Public Sector Banks in India are government owned commercial banks where the Government of India holds a majority stake. They operate under the regulation of the Reserve Bank of India while supporting both commercial banking activities and national development objectives.

• Government ownership: A bank is classified as a Public Sector Bank when the Government of India owns more than 51% of its equity, ensuring public control over management and strategic decisions.
• Regulatory framework: All PSBs function under the supervision of the Reserve Bank of India, while the Department of Financial Services under the Ministry of Finance oversees ownership and policy matters.

Functions of Public Sector Banks

The major functions and responsibilities of the Public Sector Banks in India has been discussed below:

• Development oriented banking: Along with profit generation, PSBs focus on financial inclusion, priority sector lending, agriculture, MSMEs, education, housing and social welfare programmes.
• Implementation of government schemes: PSBs are the primary institutions for schemes such as Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Mudra Yojana, PM Vishwakarma, Direct Benefit Transfer and other financial inclusion initiatives.
• Economic stabilisers: During economic slowdowns or financial stress, PSBs maintain credit flow to productive sectors, supporting economic stability and employment generation.

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Public Sector Banks in India Historical Background

Public Sector Banks have evolved through nationalisation, consolidation and reforms to become India’s largest banking institutions. Their journey reflects the country’s changing development priorities and financial sector reforms.

• Early development: Many present day PSBs were established between the late nineteenth and early twentieth centuries to serve trade, agriculture and domestic banking needs across different regions.
• Creation of State Bank of India: The Imperial Bank of India, established in 1921, was transformed into the State Bank of India in 1955, creating India’s largest government owned commercial bank.
• Bank Nationalisation in 1969: Fourteen major commercial banks were nationalised to expand banking services, improve rural credit availability and strengthen financial inclusion across the country.
• Second phase of Bank Nationalisation: In 1980, six more commercial banks were nationalised, further increasing government participation and expanding institutional banking in underserved regions.
• Economic reforms after 1991: Liberalisation introduced greater competition from private banks, leading PSBs to modernise technology, improve governance and strengthen operational efficiency.

List of Public Sector Banks in India

India currently has 12 Public Sector Banks, each playing an important role in credit delivery, financial inclusion and economic development across different regions. The list of Public Sector Banks in India with their headquarters has been provided below:

1. State Bank of India: Headquarters at Mumbai, Maharashtra. Originally established as the Imperial Bank of India in 1921 and converted into State Bank of India in 1955. It is India’s largest commercial bank.
2. Punjab National Bank: Headquarters at New Delhi. Founded in 1894, it is among India’s oldest banks and became one of the country’s largest PSBs after the 2020 banking consolidation.
3. Bank of Baroda: Headquarters at Vadodara, Gujarat. Established in 1908, it has a significant domestic and international presence with a strong corporate and retail banking network.
4. Canara Bank: Headquarters at Bengaluru, Karnataka. Founded in 1906, it became one of India’s largest PSBs after the merger of Syndicate Bank in April 2020.
5. Union Bank of India: Headquarters at Mumbai, Maharashtra. Established in 1919, it expanded considerably after absorbing Andhra Bank and Corporation Bank during consolidation.
6. Indian Bank: Headquarters at Chennai, Tamil Nadu. Founded in 1907, it strengthened its national presence following the merger with Allahabad Bank in 2020.
7. Bank of India: Headquarters at Mumbai, Maharashtra. Established in 1906, it operates an extensive domestic network while maintaining an international banking presence.
8. Central Bank of India: Headquarters at Mumbai, Maharashtra. Founded in 1911, it remains one of India’s oldest public sector commercial banks with nationwide operations.
9. Indian Overseas Bank: Headquarters at Chennai, Tamil Nadu. Established in 1937, it has specialised expertise in international banking while serving domestic retail and corporate customers.
10. UCO Bank: Headquarters at Kolkata, West Bengal. Established in 1943, it maintains a strong presence across eastern India and supports agriculture and MSME lending.
11. Bank of Maharashtra: Headquarters at Pune, Maharashtra. Founded in 1935, it has consistently maintained strong financial performance and serves retail, agriculture and industrial sectors.
12. Punjab & Sind Bank: Headquarters at New Delhi. Established in 1908, it continues to expand banking services with emphasis on financial inclusion and priority sector lending.

Public Sector Banks Merger in India

Bank Consolidation has been one of the most significant banking reforms aimed at creating larger, stronger and globally competitive Public Sector Banks in India.

• Mega Consolidation 2020: The Union Cabinet approved the merger of ten Public Sector Banks into four larger entities, with effect from 1 April 2020, to improve scale and operational efficiency.
• Punjab National Bank Merger: Oriental Bank of Commerce and United Bank of India were merged into Punjab National Bank, creating one of India’s largest government owned commercial banks.
• Canara Bank Merger: Syndicate Bank was merged with Canara Bank, strengthening its customer base, branch network and lending capacity across multiple regions.
• Union Bank and Indian Bank Mergers: Andhra Bank and Corporation Bank merged with Union Bank of India, while Allahabad Bank merged with Indian Bank, significantly expanding their national presence.
• Benefits of Consolidation: The mergers created seven large PSBs with business exceeding ₹8 lakh crore each, enabling larger lending capacity, economies of scale, improved technology adoption and stronger risk management.
• Impacts of Merger: Consolidation improved competitiveness, operational efficiency, digital capabilities, talent utilisation and the ability to finance large infrastructure and industrial projects.

Public Sector Banks Challenges

Despite major improvements, Public Sector Banks in India continue to face structural, operational and emerging challenges while balancing commercial objectives with developmental responsibilities.

• Managing stressed assets: Although Gross NPA declined to 1.93% and Net NPA to 0.39% by 31 March 2026, maintaining high asset quality requires continuous monitoring and prudent lending.
• Competition from private banks: Private sector banks continue to lead in innovation, customer experience and digital services, requiring PSBs to accelerate technological modernisation.
• Cyber security risks: Growing digital banking adoption increases exposure to cyber threats, making stronger cyber resilience and operational risk management essential priorities.
• Operational efficiency: Continuous improvement in cost management, productivity and governance remains necessary despite the cost to income ratio improving to 49.67% during FY 2025-26.
• Global economic uncertainties: International geopolitical developments, including disruptions in the Middle East, require PSBs to remain financially resilient and maintain adequate risk preparedness.
• Strengthening customer services: Faster grievance redressal, responsible digital lending, transparent banking practices and wider financial literacy remain important for maintaining public confidence.

Public Sector Banks in India Recent Developments 2026

Public Sector Banks in India recorded one of their strongest financial performances during FY 2025-26, supported by robust credit growth, improved profitability and major governance reforms.

• Record business growth: Aggregate business reached ₹283.3 lakh crore as on 31 March 2026, registering 12.8% annual growth. Deposits increased with 10.6% growth, while gross advances rose 15.7% year on year.
• Strong support to productive sectors: Retail advances grew 18.1%, agriculture advances 15.5% and MSME advances 18.2%, highlighting PSBs’ continued role in entrepreneurship, financial inclusion and broad based economic development.
• Historic improvement in asset quality: Gross NPA declined to 1.93%, Net NPA to 0.39%, provisioning coverage remained above 90% in every PSB, slippage ratio reduced to 0.7% and recoveries including written off accounts reached ₹86,971 crore.
• Major Achievements: Aggregate operating profit reached ₹3.21 lakh crore, while net profit rose 11.1% to a record ₹1.98 lakh crore, marking the fourth consecutive year of overall profitability. Aggregate CRAR improved to 16.6%, supported by ₹50,551 crore capital raising, well above the regulatory requirement of 11.5%.
• Digital transformation and governance reforms: PSBs expanded paperless lending through e-KYC, digital documentation, Straight Through Processing (STP), government platform integration, stronger cyber security, improved operational efficiency and citizen centric banking services.
• Governance and financial inclusion initiatives: The Department of Financial Services reviewed PSB performance across governance, financial inclusion and digital banking. The “आपकी पूँजी, आपका अधिकार (Your Money, Your Right)” campaign helped return over ₹6,800 crore of unclaimed financial assets to nearly 29 lakh rightful claimants, while digital public service delivery was strengthened through an upgraded multilingual DFS portal.