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Foreign investors continue to buy PSU bank shares even as $19 billion leaves IndiaForeign investors are increasing stakes in state-owned banks despite heavy selling in Indian equities, attracted by lower valuations, rising profits and strong stock gains across PSU lenders.By Yoosef K   February 19, 2026, 5:31:01 PM IST (Published)2 Min ReadOverseas investors have been steadily increasing their stakes in almost all state-owned banks over the past several quarters, even as they remain net sellers of Indian equities overall.

While foreign portfolio investors (FPIs) have yet to resume broad-based buying in Indian markets, they have quietly stepped up exposure to state-run banks, drawn by relatively attractive valuations and improving growth prospects.

Among PSU lenders, Bank of Maharashtra has seen a steady rise in overseas ownership over the last eight quarters. FPIs, who held less than a 0.5% stake in the lender about two years ago, now own nearly 5%. Shares of Bank of Maharashtra climbed to a 52-week high of ₹69.85 on 19 February.

Other state-run banks that hit their 52-week highs on Thursday include Bank of India, Indian Bank and Union Bank of India.

Historical shareholding data analysed by CNBC-TV18 shows the trend is broad-based. Union Bank of India has witnessed FPI holdings rise for four consecutive quarters to 8.14% — the highest level in a decade. Canara Bank has seen three straight quarters of increases, taking foreign ownership to 14.6%, the highest since September 2012.

Other state-owned lenders, including Bank of Baroda, Indian Overseas Bank, Punjab National Bank and State Bank of India, also recorded rising foreign ownership in the September and December quarters of 2025. FPI holding in SBI stood at 10.3% at the end of December 2025 — the highest in the last five quarters.

The selective accumulation in PSU banks comes despite FPIs being net sellers of Indian equities for most of 2025. They sold $13.4 billion worth of shares in the March quarter, $9.3 billion in the September quarter and $1.4 billion in the December quarter, taking total 2025 outflows to a record $19 billion.

So far in 2026, overseas investors have sold nearly $2 billion worth of Indian shares, according to Bloomberg data.

The renewed interest in PSU lenders coincides with strong stock performance. The Nifty PSU Bank index has rallied nearly 60% over the past year, compared with gains of 23% in the Nifty Bank index and 11% in the benchmark Nifty 50.

Despite the sharp rally, the PSU Bank index trades at around 1.3 times one-year forward book value, versus nearly 2 times for the Nifty Bank index, suggesting valuations remain relatively attractive.Continue Reading(Edited by : Vivek Dubey)TagsForeign portfolio investors FPIPSBspublic sector banks PSBspublic sector undertakings PSUs