Government Banks in India 2025 - Features & Merger List

Government Bank in India forms the backbone of the India’s financial landscape. Over the years, various Public Sector Banks in India have gone through significant mergers to improve efficiency, economic growth and financial inclusion. Due to frequent mergers, the number of Public Sector Banks have reduced in number and understanding their new features is important for all government job aspirants. In this guide we will be covering all the recent mergers and how government banking sector works. Stay tuned!

What Makes a Bank a Government Bank in India?

There are many banks but a bank becomes Government Bank in India when the central government owns majority stake, over 50% ownership. These are known Public Sector Banks (PSBs) in India. The Ministry of Finance governs the operations of the PSBs and they follow the RBI regulations. The shares of PSBs are listed in stock exchanges.

Updated List of Government Banks in India (2025)

There are 12 Public Sector Banks in India which offer various financial products and initiatives. They are the cornerstone in the Indian financial system and provide service across all the urban and rural areas. The prominent banks are State Bank of India and Punjab National Bank.

The following table shows the top government banks in India:

Top 10 Government Banks in India – Overview

At present, there are 12 Government Banks in India and among them, some stand out because of their size and influence. The State Bank of India (SBI) continues to be the largest government bank in India and other top government banks include include Punjab National Bank, Bank of Baroda, and Canara Bank which offer a wide range of financial products. The top government banks in India are:

• State Bank of India (SBI)
• Punjab National Bank (PNB)
• Bank of Baroda
• Canara Bank
• Union Bank of India
• Indian Bank
• Bank of India
• Central Bank of India
• UCO Bank
• Bank of Maharashtra

Features of Public Sector Banks in India

• Government Ownership: The Government of India owns majority stake (over 50%).
• Focus on Social Welfare: Their primary objective is public interest and financial inclusion and not just profit
• Widespread network: PSBs can be found even in rural and semi-urban areas.
• Priority to underprivileged sectors: They have to compulsorily lend a significant portion to sectors like education, housing, agriculture and MSMEs
• Implementation of Government Schemes: They play a crucial part in enforcing the government initiatives like PMJDY, Mudra Yojana etc.
• Regulated by both RBI and Ministry of Finance
• Wide range of services: They all banking services at standardized rates and banking services (deposits, loans, remittances, etc.) for financial inclusion
• Influences The Economy: One of their responsibilities is to mobilize savings and finance infrastructure projects.
• Considered safe and reliable: Because they are supported by the Government of India, they are trusted by the public

The Role of Public Sector Banks in India’s Economy

1. Financial Inclusion
The extensive network of Public Sector Banks in India, especially in the remote and rural areas which increases the accessibility. They also provide financial services to unbanked populations and often drive initiatives like PM Jan Dhan Yojana for the financial security of underprivileged sections of society

 2. Economic Growth
One of the most important responsibilities of PSBs is to channelize the savings to the productive sectors like agriculture, infrastructure and MSMEs. They drive capital formation and entrepreneurship which leads to economic development

3. Social Welfare

PSBs are given the responsibility to implement welfare schemes like loan waivers, subsidies and DBT programs. Their main goal is financial upliftment which is why they offer subsidized loans to farmers, students and low-income groups.

4. Financial Stability
PSBs are considered reliable and trustworthy, especially during economic stress and their presence ensures systemic stability.

5. Additional Functions
They also offer services like foreign exchange, trade finance, insurance, and mutual funds. They promote financial literacy and help bridge the knowledge gaps to help people make better financial decisions.

Public Sector Banks in India – Before Merger List

On 30th August, 2019, the declaration to merge banks was released, where many banks came together and became one entity. Before the mergers happened, the following banks were functioning separately:

1. Allahabad Bank
2. Andhra Bank
3. Bank of India
4. Bank of Maharashtra
5. Canara Bank
6. Central Bank of India
7. Corporation Bank
8. Dena Bank
9. Indian Bank
10. Indian Overseas Bank
11. Oriental Bank of Commerce
12. Punjab & Sind Bank
13. Punjab National Bank
14. Syndicate Bank
15. UCO Bank
16. Union Bank of India
17. United Bank of India
18. Vijaya Bank
19. IDBI Bank (77.79% government stake)
20. SBI+ and its five associate banks
21. Bharatiya Mahila Bank

Public Sector Banks in India – After Merger List

The following banks came together to merge and provide better facilities to the public:

• PSBs that merged: SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, and Indian Bank.
• Independent banks that merged: Indian Overseas Bank, Uco Bank, Bank of Maharashtra, Punjab and Sind Bank, Bank of India, and Central Bank of India.

The largest nationalized banks in 2025 after merger is given below:

Major Changes in Government Bank Mergers in India

Mergers of government banks in India reshaped the banking realm by going through mergers which reduced the number of PSBs and became more efficient. The mergers happened between 2019 and 2020 with an aim to create banks that are globally competitive and has wider reach.

Reduced Number of PSBs:

The number of Public Sector Banks in India went from 27 to 12. This was considered a huge change and aimed at streamlining the operations and cutting overlapping costs. This also enhanced the resource allocation and efficiency

Formation of Bigger Banks:

• Bank of Baroda, Vijaya Bank, and Dena Bank came together to merge into one and created India’s third-largest PSU bank.
• Similarly, the second-largest bank was formed by the merger of PNB, Oriental Bank of Commerce, and United Bank of India
• Canara bank absorbed Syndicate Bank and became a bigger bank to expand its presence and customer base.
• Indian Bank and Allahabad Bank came together to widened their service network by integrating better financial products, services and general outreach.
• Union Bank merged with Andhra Bank and Corporation Bank with an aim to focus on cost optimization and higher productivity

Increased Capital & Market Reach:

Due to merger of various big and small banks, the newly formed banks now have stronger customer bases, capital bases and wide reach which allows them to issue larger loans and support bigger infrastructure projects.

Technological Upgrades:

With more resources and capital, merged banks are able to invest in AI-powered services, cybersecurity, digital banking tools in order to improve customer experience.

Cost Rationalization:

The merger also aimed at overcoming the problem of overlap and redundant roles. This helped reducing cost to income ratio

Improved Competitiveness:

 Larger public sector banks have benefitted from the mergers as it improved the overall performance of the banks. They are now equipped to compete with private banks as well as the global banks.

Operational Efficiency:

With mergers, the backend systems have been streamlined and banks have better risk control

Wider Inclusion:

With existing bank networks coming together and strengthening the network, the rural presence has enhanced which boosts financial inclusion

Different Types of Government Banks in India

The Public Sector Banks in India are categorized into Central Banks, Commercial Banks, Cooperative Banks and Regional Rural Banks (RRBs). Their responsibilities and examples are explained below: