PSU Banks Crash; SBI, PNB, Canara, Baroda Bank Stocks Fall 2%; Bank Strike To Public Sector Banks Merger Buzz

PSU banks crashed sharply on Monday, September 28, 2026, following the broader bearish trend in the overall market. However, PSU bank stocks have been in the limelight for the past few weeks due to the nationwide banks union strike and fake buzzes of mega mergers. Today, large-cap banks like SBI, PNB, and Bank of Baroda fell up to 2%.

PSU Bank Shares Crash

At the time of writing, Nifty PSU Bank index plunged by 1.64% or 136.25 points to trade around 8,158.25. The index is now recording nearly 5.2% crash on a month-on-month basis.

On Monday, SBI share price plunged by 1.3%, while Bank of Baroda shares dropped by 1.4%. Meanwhile, Punjab National Bank (PNB) and Canara Bank tumbled by 2%. All other PSU banks were in deep red.

Bank of Maharashtra crashed 2.6%, Union Bank of India plummeted 2.51%, and Bank of India declined 2.44%. Also, Indian Bank, UCO Bank, and Indian Overseas Bank slipped by 1% to 1.5%. Further, Punjab & Sind Bank dropped 1.7% and Central Bank of India is down by 1.44%.

PSU bank shares dropped despite the bank unions deferring their 3-day long strike, which was expected to impact banking services across the country.

Bank Strike Deferred

Initially, the UFBU, which claims to represent 90% of the banking employees in India, had called for a three-day strike from September 28th to September 30th. UFBU, along with six other unions, had already carried out a nationwide protest on September 11th.

They also threatened to carry out an indefinite strike from October 26th, 2026.

They demands were ---- implementation of the agreed five-day banking, keeping the unilateral PLI scheme in abeyance, bilateral modification of the PLI framework, and settlement of the long-pending residual issues.

However, after considering the progress achieved and the commitments emerging from the discussions with Indian Banks Association, UFBU has decided to defer the proposed agitational programs and strike actions. The decision is a deferment in the light of positive developments. The All India Bank Officers Confederation said," it is not an abandonment of our demands."

Earlier, PSU banks were in trend due to a fake buzz that major banking mergers were declared by the Finance Ministry.

PSU Banks Merger

The fake buzz claimed that the Finance Ministry has formed a new amalgamation scheme and structure.

The fake document claims that smaller PSU banks like Indian Bank, Bank of Maharashtra and Central Bank of India will be merged with State Bank of India. It claims that these three banks will become part of SBI Group.

Meanwhile, the document also claims that PNB will acquire Union Bank of India, Bank of India and Punjab & Sind Bank. While Bank of Baroda will acquire Canara Bank, Indian Overseas Bank and UCO Bank.

PIB's FACTCHECK, a government-backed media portal, has debunked the fake buzz. PIB said, "A document circulating on social media, purportedly issued by the Ministry of Finance, claims that the Central Government has notified a scheme for the amalgamation of Public Sector Banks."

PIB said it's fake.

However, this does not mean that one of the agenda of the government is to have fewer and stronger public sector banks that can compete globally. In the past decade, the Indian financial system has seen significant transformation, and the merger of two or multiple banks to form one uniform and strong bank is part of this paradigm shift.

Here are some of the important banks merger since 1993:

1. April 2017

SBI + State Bank of Bikaner And Jaipur + State Bank of Hyderabad + State Bank of Patiala + State Bank of Mysore + State Bank of Travancore + Bharatiya Mahila Bank

2. April 2019

Bank of Baroda + Vijaya Bank + DENA Bank

3. April 2020

Punjab National Bank + Oriental Bank of Commerce + United Bank of India

Canara Bank + Syndicate Bank

Union Bank of India + Andhra Bank + Corporation Bank

Indian Bank + Allahabad Bank

Which Banks Are Not Merged?

There are six banks that are currently in the PSU banking system as single entities. These are

- Bank of India

- Indian Overseas Bank

- Central Bank of India

- Bank of Maharashtra

- UCO Bank

- Punjab & Sind Bank

A latest report of Univest reveal that currently, only State Bank of India ranks among the world's top 50 banks by scale, even as HDFC Bank, India's largest private lender, does not feature in the global top 100, a gap that has been cited as part of the motivation for continued consolidation among the smaller public sector banks.

The report also highlighted last week that PSU bank merger speculation around Bank of Maharashtra-SBI, Central Bank-PNB and Punjab & Sind Bank-Bank of Baroda combinations reflects an ongoing policy conversation rather than a confirmed government decision, given the finance ministry's repeated clarifications that no proposal has been approved. Investors in PSU bank stocks should watch for official confirmation before acting on these reports, and should consult a SEBI-registered investment adviser before making investment decisions.

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