PSU Banks Sink Up to 40% in 2025: Can SBI Lead Recovery?

Public sector banks (PSU banks) have faced a tough year in 2025, with some stocks sinking by up to 40% despite decent earnings and favorable macroeconomic conditions. The State Bank of India (SBI), India’s largest lender, is expected to play a crucial role in reviving the sector.

Here’s a breakdown of the biggest declines:

• Punjab & Sind Bank: Down 40% – the worst performer.
• Central Bank of India: Dropped 32%.
• UCO Bank: Fell 28%.
• Indian Overseas Bank: Declined 27%.
• Bank of Maharashtra: Down 4%.

On the other hand, some PSU banks have delivered positive returns:

• Indian Bank, Bank of India, Bank of Baroda, and Union Bank: Up to 12%.

Experts believe that lower interest rates, RBI’s accommodative stance, and strong earnings could help PSU banks recover. SBI’s performance remains critical, as its Q4 results showed a lower-than-expected profit decline, keeping investor sentiment hopeful.

Technical charts indicate bullish potential, and analysts suggest focusing on strong performers like SBI and Bank of Baroda. While challenges remain, a sector-wide recovery is possible if key banks take the lead.