Budget 2026: BOI, BoB, Union Bank, other PSU bank shares fall up to 7%; here’s why

Union Budget 2026: Shares of Public Sector Undertaking (PSU) banks declined on Sunday, witnessing a sell-off after the key announcements from the Union Budget. The state-run lenders' stock dropped as much as 7 per cent during the special trading session.

At 12:57 pm, Bank of India (BOI) was the biggest casualty among its peers. The stock was trading at Rs 152.6 on the BSE, down 6.95 per cent against its previous close of Rs 164.

At last check on the BSE, the scoreboard for state-owned lenders was flashing red:
Shares of Bank of Baroda (BoB): Rs 285.95, down 4.48%, 
Union Bank of India stock: Rs 172.65, down 4.43%
Bank of Maharashtra: Rs 62.39, down 4.34%
Indian Bank: Rs 874.05, down 4.09%

The trigger for the slide may be Finance Minister Nirmala Sitharaman’s proposal to constitute a high-level committee for a comprehensive review of India’s banking sector. 

Sitharaman said, “I propose forming a high-level committee on banking for Viksit Bharat to comprehensively review the sector and align it with India's next phase of growth, while ensuring financial stability, inclusion and consumer protection.”
The BSE PSU Bank index was down 3.68 points to 4,905.17.

The formation of a high-level banking committee, as well as the proposed restructuring of PFC and REC, demonstrate a clear intention to future-proof India's financial system for a Viksit Bharat, said Varun Gupta, CEO, Groww Mutual Fund.

“Strengthening public sector NBFCs through better scale, governance and technology adoption is critical to ensuring that long-term capital reaches infrastructure and priority sectors efficiently, without compromising on financial stability or consumer protection. Thoughtful execution of these reforms can materially improve credit delivery and resilience across the system,” Gupta said.