Union Bank, PSU Banks Share Price Rise up to 4% Amid Renewed Consolidation Buzz

Shares of Union Bank, Indian Bank, and several other public sector lenders surged up to 4% on September 10, 2025, amid media reports of renewed consolidation efforts by the Indian government. The sector-wide gain highlights investor optimism about the potential creation of stronger and larger banking entities.

Union Bank and Peers Rally as Consolidation News Surfaces

On September 10, 2025, Union Bank of India, Indian Bank, Punjab & Sind Bank, and Bank of India each recorded gains of over 3%, driven by expectations of government-led consolidation plans. Canara Bank, Bank of Maharashtra, Punjab National Bank, and lenders with low float, such as UCO Bank and Indian Overseas Bank, also posted gains between 2% and 3%. The Nifty PSU Bank index moved higher as all constituent banks traded in the green.

Government Revisits Bank Consolidation Strategy

The government's decision to revisit the banking consolidation strategy has reignited speculation in the market. Reports suggest that the push is to build larger public sector banks capable of matching the growing credit needs of the Indian economy. The last comprehensive consolidation took place in 2020, reducing the number of PSU banks from 27 to 12 by merging smaller lenders with larger entities like Punjab National Bank and Canara Bank.

Impact of Potential Foreign Investment Relaxation

The buzz also includes the possibility of the government raising the 20% limit on foreign ownership in PSU banks. If implemented, this move could attract global investment and improve capital inflow, further strengthening bank balance sheets. Consolidated entities are expected to offer improved scale, operational efficiency, and wider geographical outreach.

Read More: Public Sector Banks Close 1.5 Million Inactive Jan Dhan Accounts in April!

Conclusion

The recent surge in PSU bank shares indicates growing optimism around the government’s renewed consolidation agenda. With Union Bank and others seeing notable gains, investors appear hopeful about potential structural reforms that may strengthen India’s public sector banking landscape.

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