5 PSU Banks Gearing up to List Their Subsidiaries After FM's Monetisation Drive

 

Public sector banks are being pressured by the government to expedite their plans for initial public offerings (IPOs) for their joint ventures and subsidiaries. 

 For a medium- to long-term market debut or strategic disposal, nearly 15 of these firms have been shortlisted. The objective? To maximize returns on state-owned capital, unlock value, improve governance, and access public markets when they're needed.

PSBs have been encouraged to increase capital in their subsidiaries, improve operational efficiency, and streamline decision-making in order to become listing-ready. 

 The finance ministry also wants a more professional approach overall and better governance. These five public sector banks are laying the foundation for their subsidiaries that may soon be on the market.

PSU Bank	Subsidiary	Business Type
State Bank of India	SBI General Insurance	General Insurance
	SBI Payment Services	Merchant Payments
Canara Bank	Canara Robeco AMC	Mutual Fund / Asset Mgmt
	Canara HSBC Life Insurance	Life Insurance
Bank of Baroda	IndiaFirst Life Insurance	Life Insurance
Union Bank of India	IndiaFirst Life Insurance	Life Insurance
Central Bank of India	Cent Bank Home Finance Ltd	Housing Finance
	Centbank Financial Services Ltd	Financial Advisory / Trustee
Punjab National Bank	PNB MetLife India Insurance	Life Insurance

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Yearly review meeting with the MDs and CEOs of PSU banks was led by Finance Minister. View the Highlights

 

A high-level annual performance assessment meeting with the CEOs and managing directors of all Public Sector Banks (PSBs) was presided over by Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman. The meeting focused on key areas like Financial performance, Inclusive lending and financial inclusion,Cybersecurity, Customer service and innovation.

Strong Financial Performance of PSBs

• In FY 2024–25, Public Sector Banks recorded a record net profit of Rs.1.78 lakh crore.
• Net Non-Performing Assets (NNPAs) came down to 0.52%, a multi-year low. This shows better control over bad loans and improved financial health.
• The total business of PSBs (deposits + loans) increased from Rs.203 lakh crore in FY 2022–23 to Rs.251 lakh crore in FY 2024–25.
• Dividend payouts by PSBs increased from Rs.20,964 crore to Rs.34,990 crore over the same period.
• Banks are financially strong with a Capital to Risk (Weighted) Assets Ratio (CRAR) of 16.15% as of March 2025.

Key Instructions and Directions by the Finance Minister

1. Financial Inclusion Campaign

• Starting July 1, 2025, PSBs must actively take part in a 3-month financial inclusion campaign.
• It will cover 2.7 lakh Gram Panchayats and Urban Local Bodies.
• Focus areas: KYC updates, re-KYC, and helping citizens claim unclaimed deposits.

2. Improving Deposit Mobilization

• Banks should increase efforts to mobilize more deposits to support rising demand for loans.
• They were told to conduct special drives, leverage branch networks, and reach out more in rural and semi-urban areas.

3. Support for Key Credit Schemes

Banks were instructed to scale up lending under the following schemes:

• PM MUDRA Yojana
• PM Vishwakarma
• PM Surya Ghar Muft Bijli Yojana
• PM Vidyalakshmi
• Kisan Credit Card (KCC)

4. Focus on Agriculture in Low-Productivity Districts

• Under the PM Dhan Dhanya Yojana, banks must identify 100 low-agriculture productivity districts.
• They should create special credit products for farmers in these areas to improve crop yields and local economies.

5. New Credit Assessment for MSMEs

• A new credit model for MSMEs was launched on March 6, 2025.
• So far, 1.97 lakh MSME loans have been sanctioned worth Rs.60,000 crore.
• Banks were told to implement this model more strongly to make credit easier for small businesses.

 Green & Renewable Energy Lending

• Lending to renewable energy projects is now a national priority.
• PSBs were encouraged to develop new credit models to support the Small Modular Nuclear Reactors (SMRs) as announced in the Budget 2025–26.

7. Boosting Corporate Lending

• Banks were asked to find new sectors with long-term growth potential and lend responsibly.
• Corporate lending should be increased with strong risk management practices.

8. Customer Service and Digital Innovation

• Banks must focus on:
  • Faster grievance redressal
  • Multilingual services (online and offline)
  • Easy-to-use digital platforms
  • Clean and customer-friendly physical branches
• Urban expansion should be scaled up to match rapid urbanisation.

Other Important Highlights

• GIFT City Presence: Banks should expand their operations in GIFT City (Gujarat) and take part in international platforms like the India International Bullion Exchange (IIBX).
• Stand Up India Scheme: 2.28 lakh loans sanctioned, worth Rs.51,192 crore.
• PM Vidya Lakshmi Scheme: 6,682 education loan applications sanctioned, amounting to Rs.1,751 crore.
• Vacancies in Banks: FM asked banks to quickly fill all staff vacancies to ensure better services.
• Banking Access in North-East: Banks were asked to open more branches in the North-East and strengthen the Business Correspondent (BC) network to provide banking in remote villages.

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