List of Government Banks in India after Merger

Government banks in India play a significant role in the country’s economy. They offer millions of people essential services like basic banking facilities, savings and deposit accounts, loans and credit, and financial inclusion. These banks, primarily public sector undertakings (PSUs), are majority-owned by the government, and their aim is to support social welfare and, economic and social development.

They meet daily needs like providing easy access to credit, enabling safe savings, and facilitating transactions for both rural and urban areas. We will talk about, in detail, the types of government banks, top government banks in India, recent mergers, and how they help drive India’s economic growth.

What is a Government Bank in India?

A government bank in India is one where the government owns more than 50% of its shares to ensure they have control over its operations. These banks, also known as public sector banks, focus on social welfare and enable every citizen to have access to banking services.

Nationalisation of banks was an important policy decision that transformed the banking landscape in India. The nationalization of banks happened in two phases: in 1969, 14 private banks were nationalised, and in 1980, 6 more followed. Additionally, 7 State Bank of India subsidiaries were nationalised in 1959. Today, after recent mergers, there are 12 public sector banks. 

Types of Government Banks in India

Government banks come in different types in India. Each of these banks plays a specific role in the country's financial system. Govt banks in India make banking accessible, and they support economic development. These are the main types of government banks in India:

1. Central Bank – The Reserve Bank of India (RBI)

Established in 1935 under the Reserve Bank of India Act, 1934, the Reserve Bank of India is the country’s central bank, which regulates and oversees all other banks in India. As the government’s bank, the RBI guides the financial system. Apart from that, it executes the following:

• Issues and manages the country’s currency.

• Sets and implements monetary policy.

• Supervises other banks.

• Manages India’s financial stability.

• Acts as a banker to the government.

• Issues government securities & manages public debt.

The RBI ensures that all govt banks in India follow rules that maintain a healthy financial system. Although the RBI doesn’t serve regular customers, it plays a major role in the background as it guides banks on interest rates, credit availability, and financial inclusion.

2. Commercial Banks

Commercial banks are one of the most common types of government banks in India. They operate to make a profit while still offering public services. The government owns most of these banks, including prominent names like the State Bank of India (SBI) and Punjab National Bank (PNB). They cater to both rural and urban sectors by providing:

• Savings and current accounts.

• Loans for personal, business, and agriculture needs.

• Services like credit cards, ATMs, and online banking.

Commercial banks are very important for individuals and businesses since they offer financial solutions for almost every need. They gather deposits from the public and lend that money to help people grow their businesses, purchase homes, or fund other needs. Some of the top government banks in India fall under this category.

3. Cooperative Banks

Cooperative banks are government-regulated banks that are most often organized at the state level. These banks work on community-based banking concept and facilitate financial inclusion and social welfare, especially in the rural and agricultural sectors. They work on the principle of cooperation where members are the owners and customers of the bank.

Cooperative Banks are classified into:

Urban Cooperative Banks (UCBS)

• UCBs operate in urban and semi-urban centres.

• They offer credit to small businesses and individuals.

• They are classified into Scheduled and Non-Scheduled Cooperative Banks.

Rural Cooperative Banks (RCBS)

RCBS serve customers in rural areas and they are categorized as Long Term Structure and Short Term Structure depending on the type of lending activity they undertake.

Short Term Structure: These banks lend for a period of up to one year for short term credit needs such as buying seeds, sowing, cultivation, fertilisers, etc.

They are further categorised in a three-tier structure as:

• State Cooperative Banks (regulated by the RBI, State Governments, and NABARD).

• District Cooperative Banks.

• Primary Agriculture Cooperative Banks (at the village level).

Long Term Structure: These banks lend for long term fund requirements ranging from 1 year up to 25 years e.g. for land purchase or development, buying farm equipment, tractors, pumps, etc.

• State Cooperative Agricultural and Rural Development Banks (SCARDBs): They offer long term loans for agri and rural development.

• Primary Cooperative Agricultural and Rural Development Banks (PCARDBs): They offer banking services to small farmers, rural artisans, labourers, etc.

The main goal of these banks is to uplift the rural economy by making banking more accessible to farmers and small-scale industries. Cooperative banks help fulfill everyday financial needs in rural areas through concessional loans and easy access to banking services.

4. Regional Rural Banks (RRBs)

Regional Rural Banks are another major category of govt banks in India. They were set up in 1975 to provide financial services to rural and agricultural areas.

RRBs were set up with the aim of developing the rural economy by providing credit to marginal farmers, small business owners, agricultural labourers, and rural artisans to aid agriculture, business, and small-scale industry in rural areas.

These banks are different because they’re a joint venture between:

• The Central Government (50% ownership).

• The State Government (15%).

• A sponsoring Commercial Bank (35%).

Although RRBs mainly focus on providing affordable credit to the agricultural sector, they also offer essential banking services like savings accounts, fixed deposits, and loans to rural populations.

Today, the number of RRBs has reduced due to mergers, but they are an essential part of India’s banking structure. Examples of RRBs are Prathama Bank and Andhra Pradesh Grameena Vikas Bank.

5. Specialized Banks

India has several specialized government banks that serve special purposes. These banks cater to specific sectors or financial needs and are critical to the country's economic development. Here are some examples:

• Small Industries Development Bank of India (SIDBI): This bank offers financial assistance to small-scale industries. The main goal of the bank is to support the growth of small businesses by providing them with modern equipment and technology.

• Export-Import Bank of India (EXIM Bank): EXIM Bank provides loans and financial assistance for importing and exporting goods. This bank plays a vital role in promoting India’s international trade.

• National Bank for Agricultural and Rural Development (NABARD): NABARD supports rural development through financial aid for agriculture, village industries, and rural infrastructure. It’s a vital player in financing projects that benefit rural communities.

These specialized banks don’t operate like traditional ones but are essential for specific sectors. They make a significant impact on areas like agriculture, small businesses, and trade.

6. Payments Banks

Payments banks, like India Post Payments Bank, are a relatively new type of bank in India, regulated by the RBI. Unlike traditional banks, payment banks only offer essential banking services like:

• Deposits up to Rs. 1,00,000.

• Mobile banking services.

• Debit cards and ATMs.

However, payment banks don’t offer loans or credit cards. They focus primarily on providing easy access to banking services, especially for the unbanked population. Additionally, they use mobile technology to make banking simple and convenient for people in rural and underserved areas.

Complete List of Government Banks in India

Below is the complete government bank list in India. They are ranked by their government shareholding percentage, from highest to lowest:

Top 10 Government Banks in India by Market Capitalisation

Below are the top 10 government banks in India ranked by their market capitalisation. This govt bank list will help you understand which one has the highest market value in the banking sector. This table shows their ranking, market cap, and key performance indicators.

Detailed Explanation of Top 10 Government Banks

Here’s a closer look at the top 10 government banks in India. These best government banks in India are crucial for the country’s financial growth and are recognized for their services and commitment to customers.

1. State Bank of India (SBI)

Founded in 1806, SBI is not only the oldest but also the best government bank in India. It started as the Bank of Calcutta, later merging with other banks to form the Imperial Bank of India. In 1955, it was nationalized and renamed State Bank of India. 

• Number of branches: 22,405.

• Number of ATMs: 63,977.

• Market share: SBI controls more than 20% of the market share in deposits and loans, making it the largest bank in India.

• Services offered: SBI offers services like savings accounts, fixed deposits, corporate loans, retail banking, and digital banking solutions.

• Recent developments: SBI plans to raise Rs.20,000 crore in FY25 through long-term bonds. The bank also raised Rs.5,000 crore recently via perpetual bonds. It reported a 21.6% YoY growth in net profit for FY24.

2. Bank of Baroda (BOB)

BOB was established in 1908 and is one of the top 5 government banks in India. It has grown into a global institution, providing services in over 24 countries. The focus of BOB is on innovation and financial inclusion, which has made it a leader in domestic and international banking.

• Number of branches: 8,243.

• Number of ATMs: 11,000+.

• Market share: BOB is a major player in India’s banking sector, with a solid domestic and international presence.

• Services offered: BOB offers savings accounts, home loans, personal loans, credit cards, and investment banking.

• Recent developments: The bank plans to double its tech team size by FY26 and invest in AI-based platforms. It also plays a vital role in the Pradhan Mantri Jan Dhan Yojana.

3. Punjab National Bank (PNB)

PNB was founded in 1894 and has a rich history, making it one of the oldest banks in India. The bank is one of the most prominent financial players in the country. It’s notably recognized for embracing technology to enhance customer experience.

• Number of branches: 12,248.

• Number of ATMs: 13,000+.

• Market share: PNB ranks as the second-largest government lender in India.

• Services offered: PNB provides retail banking, corporate banking, and wealth management services.

• Recent developments: In 2024, PNB revealed plans to raise Rs.75 billion to support loan growth. The bank merged with the Oriental Bank of Commerce and the United Bank of India to solidify its position.

4. Canara Bank

Canara Bank was established in 1906 and has its headquarters in Bengaluru. Its growth in digital services and commitment to social responsibility make it a key player in India’s banking sector.

• Number of branches: 9,604.

• Number of ATMs: 12,155.

• Market share: Canara Bank has a stronghold in the Indian banking market, especially after its merger with Syndicate Bank.

• Services offered: The bank offers savings accounts, loans (home, personal, education), corporate banking, and investment solutions.

• Recent developments: Canara Bank is scaling up its operations and has expanded its digital banking services to reach a wider audience.

5. Union Bank of India

The Union Bank was founded in 1919, and its headquarters is in Mumbai. Known for its customer-friendly approach, Union Bank is one of the best government banks in India due to its wide range of services and consistent performance.

• Number of branches: 8,400+.

• Number of ATMs: 9,300+.

• Market share: Union Bank holds a strong market presence, with 74.76% of its shares owned by the government.

• Services offered: The bank provides retail, corporate, and international banking services, along with loans and investment solutions.

• Recent developments: Union Bank has been investing heavily in digital transformation and improving its online banking platform.

6. Indian Overseas Bank (IOB)

IOB was established in 1937 and has grown its global presence while serving the Indian diaspora. IOB operates thousands of branches with a focus on international trade and NRI services. The bank also supports various community development projects, and that makes it a socially responsible institution.

• Number of branches: 4,000+.

• Number of ATMs: 1,151+.

• Market share: IOB has a significant market presence, particularly among non-resident Indians (NRIs).

• Services offered: The bank offers NRI banking solutions, retail banking, corporate loans, and project financing.

• Recent developments: IOB reported a 24% increase in net profit for FY24 and continues to improve its asset quality by reducing non-performing assets (NPAs).

7. Indian Bank

Indian Bank was founded in 1907 and has become a leader in retail and corporate banking. The bank plays a vital role in rural banking and financial inclusion across India.

• Number of branches: 5,847.

• Number of ATMs: 4,937.

• Market share: Indian Bank is a major government bank, with 73.84% of its shares held by the government.

• Services offered: Indian Bank provides savings accounts, loans, corporate banking, and MSME banking.

• Recent developments: The bank has been incorporating advanced technology in its banking operations and has a strong presence in government financial inclusion programs.

8. UCO Bank

UCO Bank was established in 1943 and is headquartered in Kolkata. The bank operates many branches with a presence in both rural and urban India. UCO Bank’s focus on financial inclusion and its commitment to underserved communities make it one of the top 10 government banks in India.

• Number of branches: 3,086.

• Number of ATMs: 2,236.

• Market share: UCO Bank has a strong hold on rural banking and financial inclusion.

• Services offered: The bank offers microfinance, retail banking, corporate banking, and investment services.

• Recent developments: UCO Bank continues to promote financial literacy and recently enhanced its digital banking services, including mobile banking and contactless payments.

9. Bank of India (BOI)

BOI was founded in 1906 and is one of the oldest banks in India. With 69 zonal offices, the bank is a reliable choice for retail and corporate clients.

• Number of branches: 5,100+.

• Number of ATMs: 2,000+.

• Market share: BOI holds a prominent position, with 73.38% of its shares owned by the government.

• Services offered: BOI provides a wide range of services, including savings accounts, personal loans, project financing, and investment banking.

• Recent developments: BOI has been actively involved in various financial inclusion programs, ensuring access to banking for underserved communities.

10. Central Bank of India

The Central Bank of India, established in 1911, is headquartered in Mumbai. The bank’s focus is on financial inclusion and rural development. It is also known for supporting government schemes to uplift the underserved sections of society.

• Number of branches: 4,500+.

• Number of ATMs: 1,006.

• Market share: The Central Bank of India holds a significant share in India’s rural banking sector.

• Services offered: The bank offers savings accounts, agricultural loans, MSME financing, and corporate banking.

• Recent developments: The bank is working on reducing its cost-to-income ratio and improving asset quality, aiming for better profitability by FY25.

History of Government Banking in India

Government banks in India have been crucial in shaping the financial landscape of the country. They have their roots going back to the 18th century. Early banks like the Bank of Hindustan (1770) and the General Bank of India (1786) laid the foundation. Still, it was the establishment of the Bank of Calcutta in 1806, later known as the State Bank of India (SBI), that marked the beginning of India's robust banking system.

The British colonial era saw the rise of presidency banks, including the Bank of Bengal, Bank of Bombay, and Bank of Madras. These banks later merged into the Imperial Bank of India, which became the modern-day SBI in 1955. The government took a big step in 1969 by nationalizing 14 major private banks, followed by the nationalization of six more in 1980. These moves gave the government control over most of India's banking assets, transforming govt banks in India into key players in economic development.

Over time, govt banks in India evolved to meet the needs of a growing economy, offering a range of services from rural banking to microfinance, while their extensive branch networks made banking accessible to millions. The nationalization of banks also made way for these institutions to play a vital role in funding infrastructure, agriculture, and industrial projects.

Today, govt banks in India continue to dominate the sector. However, reforms and liberalization in the 1990s opened doors for private and foreign banks, bringing competition and innovation. Mergers and consolidations, such as the recent merger of SBI with its associates, have helped streamline operations and increase efficiency in government banking.

Recent Mergers and Consolidations in Government Banks

In recent years, the Indian government has merged and consolidated many government banks to make them stronger and more efficient. This move has reshaped the government bank list in India and reduced the number of public sector banks, creating larger institutions with better financial stability.

For example, in 2017, the State Bank of India merged with its associate banks, including the State Bank of Bikaner and Jaipur, the State Bank of Hyderabad, and the State Bank of Mysore. This made SBI the largest bank in India, offering a broader range of financial services.

Another major merger occurred in 2019 when the Bank of Baroda merged with Dena Bank and Vijaya Bank. This created the third-largest bank in India in terms of business size and branch network. The goal was to improve profitability and expand their reach.

In 2020, several more government banks in India merged to form larger institutions. For example, Punjab National Bank merged with the Oriental Bank of Commerce and the United Bank of India. Canara Bank absorbed Syndicate Bank, and Union Bank of India merged with Andhra Bank and Corporation Bank.

The aim of these mergers is to create more competitive banks that will handle financial challenges better, offer more products, and improve operational efficiency. This consolidation has impacted the number of government banks in India, as it reduced the total number of PSBs but created more robust banks capable of driving economic growth.

Role of Government Banks in Economic Development

Government banks play a crucial role in boosting India’s economy. They drive financial inclusion by offering affordable banking to rural and underserved areas. This helps reduce poverty, as people can access loans, savings, and insurance. For instance, top government banks in India, like SBI and PNB, provide low-cost loans to small businesses, which fuels job creation.

These banks also fund large infrastructure projects—roads, bridges, and power plants—that improve living standards and support growth. Government banks directly contribute to India's long-term economic development by serving everyone.

Conclusion 

Government banks are the backbone of India’s economy, they offer stability and financial inclusion for everyone. Whether helping small businesses, funding infrastructure, or promoting financial inclusivity, top government banks in India play a crucial role in the economy. For investors, these banks offer safe and reliable avenues to park savings, hold deposits, and channel investments.

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FAQs

Q. What is the difference between government banks and private banks in India?

A. Government banks are owned by the state, and their focus is to provide financial services to the last mile, while private banks are owned by individuals or businesses and aim for profit. Government banks prioritize financial inclusion, while private banks often provide faster services and tech-driven products.

Q. Are government banks safe for deposits?

A. Yes, government banks in India are highly regulated and considered safe. Your deposits are protected by the government up to Rs.5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme.

Q. Do government banks offer better interest rates on loans?

A. Yes, top government banks in India often provide lower interest rates on home loans, education loans, and personal loans. Their focus on public welfare leads to more affordable loan options.

Q. How do government banks promote digital banking?

A. Government banks have improved their digital services by offering mobile apps, internet banking, and UPI services. Top government banks in India are now focusing on making online banking more accessible.