Thinking of investing in PSU bank stocks – is it safe?
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Depends on the market trend, but long-term they’re usually stable
Because PSU (Public Sector Undertaking) banks are government-backed, people see them as relatively safe compared to riskier stocks. Not all PSU banks perform equally. Some are financially stronger (like SBI), while others may have higher NPAs (bad loans).
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Considering the current financial environment and the relative stability of public sector banks, many investors are looking at these stocks. However, it’s important to assess the fundamentals, market trends, and possible risks to ensure they fit your investment goals and risk tolerance. Thorough analysis is key.
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In 2018–19, many PSU banks were struggling with high NPAs (bad loans). Their stock prices were beaten down, and sentiment around them was weak. Investor Action: One long-term investor, instead of avoiding the sector, studied the fundamentals of large PSU banks like State Bank of India (SBI) and Bank of Baroda. He noticed: - Government recapitalization plans were in place. - NPAs had peaked and were slowly declining. - Digital initiatives (like SBI’s YONO) were gaining traction. Investment Decision: He started accumulating shares of SBI around ₹260–280 levels in 2019, with a long-term horizon.