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Top Government Bank Stocks for Investment

stock investment, government bank stocks

When it comes to investing in the Indian stock market, government-owned banks (also known as public sector banks or PSBs) have always been a solid choice for investors looking for stability and long-term growth. These banks, backed by the Indian government, benefit from lower default risks, government support during times of crisis, and favourable regulations. Moreover, they often offer attractive dividend yields, making them appealing to income-focused investors.

Why Invest in Government Bank Stocks?

Government banks hold a unique position in the Indian financial landscape. Their stability, government backing, and extensive customer base make them robust investments, even in times of economic uncertainty. The following are a few reasons why investing in government bank stocks can be a smart choice for any investor:

  • Stability and Support: These banks often receive capital infusion and other forms of government assistance, ensuring their sustainability even during downturns.
  • Favourable Policies: The Indian government frequently implements policies to boost the banking sector, benefiting these institutions and their shareholders.
  • Attractive Dividends: Government banks are known for offering higher-than-average dividend payouts, making them a good option for those seeking regular income.

Top Government Bank Stocks to Consider

1. State Bank of India (SBI)

State Bank of India, the largest bank in India, dominates the country's banking sector with its expansive network, wide range of financial products, and massive customer base. SBI has consistently innovated to stay ahead of the competition, investing heavily in digital services to improve customer satisfaction and operational efficiency.

Over the past few years, SBI has shown a steady increase in profits, backed by strong loan growth, improved asset quality, and successful management of NPAs (Non-Performing Assets). The stock's price has been on an upward trajectory, offering a significant return on investment for shareholders.

Also, the Government of India holds approximately 57.5% in SBI.

Performance Comparison:

  • Last Year’s Share Price: ₹450
  • Current Share Price: ₹550
  • % Increase: 22%

2. Bank of Baroda

Bank of Baroda is another significant player in the Indian banking sector. Known for its strategic expansion plans, the bank focuses on enhancing its retail and corporate loan portfolios. With a strong international presence, it has been working to improve its asset quality and reduce NPAs (Non-Performing Assets).

Additionally, the Government's stake in the Bank of Baroda is around 63.97%. The Bank of Baroda has implemented various digital initiatives to improve customer service and operational efficiency, ensuring that it remains competitive in a rapidly evolving market.

Performance Comparison:

  • Last Year’s Share Price: ₹70
  • Current Share Price: ₹100
  • % Increase: 43%

3. Punjab National Bank (PNB)

As one of India's oldest and most trusted banks, Punjab National Bank offers a wide array of banking and financial services. PNB boasts a vast customer base, which contributes to its stability. The government has also shown support through capital infusion during challenging times, enhancing investor confidence.

Furthermore, PNB has made significant progress in reducing its NPAs, which further boosts its appeal as a safe investment option. You can determine the trust as the Government itself holds about 73.15% of PNB 

Performance Comparison:

  • Last Year’s Share Price: ₹38
  • Current Share Price: ₹58
  • % Increase: 53%

4. Canara Bank

Canara Bank is recognised for its strong retail banking operations and comprehensive range of financial products. The bank has been focusing on retail loans and digital banking, which are expected to drive future growth. Canara Bank has reported healthy financial performance, with consistent growth in profits and assets.

The Government holds approximately 62.93% of Canara Bank. Its commitment to enhancing customer experience through technology positions it well for continued success.

Performance Comparison:

  • Last Year’s Share Price: ₹160
  • Current Share Price: ₹210
  • % Increase: 31%

5. Union Bank of India

Following its merger with Andhra Bank and Corporation Bank, Union Bank of India has emerged as one of the largest public sector banks in India. The bank boasts a diversified loan portfolio across various sectors, enhancing its revenue potential. Union Bank has been investing heavily in technology to improve service delivery and operational efficiency.

Analysts have a positive outlook on the bank’s growth trajectory, thanks in part to ongoing reforms in the banking sector.

The Government owns roughly 83.49% of the Union Bank of India.

Performance Comparison:

  • Last Year’s Share Price: ₹45
  • Current Share Price: ₹72
  • % Increase: 60%

6. Indian Bank

Indian Bank, a major player in the Indian banking sector, offers a range of financial services to both retail and corporate customers. The bank provides comprehensive banking solutions, catering to diverse market segments. Indian Bank has implemented robust recovery measures to tackle NPAs effectively, bolstering investor confidence.

The support from the government ensures stability during economic fluctuations, making Indian Bank a solid option for long-term investors. In Indian Bank, the Government of India holds approximately 79.86% as of the latest data

Performance Comparison:

  • Last Year’s Share Price: ₹78
  • Current Share Price: ₹102
  • % Increase: 31%

Government Bank Stocks: A Stable Investment Option

Investing in government bank stocks provides stability, regular dividends, and exposure to the growth potential of India’s banking sector. With strong government backing and favourable regulatory policies, these stocks often weather economic downturns better than others.

Whether you’re a seasoned investor or new to the market, TradingBells can make your investment journey smoother by offering the tools and insights you need to stay ahead of the curve. From market research to personalized financial guidance, TradingBells helps investors make smart, data-driven decisions.

How TradingBells Can Help in Your Investment Journey?

We provide the tools and resources that can simplify and enhance your experience when investing in government bank stocks or any other assets. With the platform, investors can access comprehensive market research, real-time data, and expert analysis to make well-informed decisions. 

Our intuitive tools allow you to track stock performance, analyse key metrics, and manage their portfolios efficiently. Whether you're keeping an eye on market trends or evaluating the potential of specific stocks like government banks, TradingBells ensures that you stay ahead with actionable insights tailored to your financial goals.

 

Final Thought!

Investing in government bank stocks can be a prudent choice for those looking for stability and potential growth in the Indian stock market. The banks mentioned above are not only backed by the government but have also demonstrated resilience and adaptability in a changing economic landscape.

Key Takeaways:

  • Government banks have shown impressive growth over the past year, making them attractive to investors.
  • Ongoing reforms and digital initiatives position these banks well for future growth.
  • Adding government bank stocks to your portfolio can enhance stability and reduce overall risk.

As with any investment, it is crucial to conduct thorough research and consider your financial goals and risk appetite before making any decisions.

For a seamless investment experience, consider utilising TradingBells. With our comprehensive tools and expert guidance, you can navigate the stock market confidently and make informed decisions about your investments in government bank stocks.

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