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Top 5 Reasons Behind PSU Banks' Crash After FDI Limit Clarification
PSU banks saw a sharp decline following the government's clarification that it will not raise the FDI limit, ending speculation and cooling stock sentiment.
State owned banks faced significant selling pressure on Wednesday, December 5, 2025, following the government’s clarification that it would not raise the Foreign Direct Investment (FDI) limit in public sector banks. This news led to a sharp decline in the Nifty PSU Bank index, which dropped 3%. Indian Bank, PNB, and Bank of India saw losses of up to 6%. The initial surge in PSU bank stocks had been triggered by speculation in October that the government would increase the FDI limit to 49% from 20%, but the clarification has put these expectations to rest.