Nifty PSU Bank P/B at 1.18, and a yield edge that shrank

Where PSU banks stand

Nifty PSU Bank closed at 8,539.75 on Monday, 24 August 2026, at a price-to-book ratio of 1.18. Its P/E was 7.68 and its dividend yield 0.75%.

These are NSE's end-of-day figures, charted on the Nifty PSU Bank valuation page.

Close to the middle on book

The comparisons start on 31 March 2021, when NSE moved its index ratios to consolidated figures: 1,332 sessions.

• P/B: 732 sessions closed lower, about the 55th percentile. The low, 0.65, came on 20 June 2022; the high, 1.86, on 3 June 2024.
• P/E: 338 sessions closed lower, about the 25th percentile. The 69.48 high is an early reading from April 2021, when the earnings behind the index were small.
• Dividend yield: 1,021 of 1,290 sessions with a published yield offered more.

That is the opposite of the picture for private banks, which this series found near their lowest P/B since 2021 two weeks ago.

Against private banks

Medians are since 31 March 2021.

PSU banks still cost much less than private banks on both measures. But the gap has narrowed. The PSU index's P/B is 0.60 times the private index's. Since March 2021 that multiple has had a median of 0.46, and 1,113 of 1,332 sessions showed a smaller one. The narrowest gap of the period, 0.71, came on 27 February 2026, the day after the PSU Bank index set the highest close in our record, which starts in 2012: 9,879.85.

On P/E the gap is close to normal: 0.45 times, against a median of 0.45.

The yield edge that shrank

For most of the last three years, PSU banks were the high-yield end of banking. Their yield averaged 1.91% in 2023, 1.90% in 2024 and 2.47% in 2025, and reached 3.40% on 20 June 2025. At the end of May 2026 it was 2.38%.

Then the dividends behind the index fell away. Multiplying the index by its yield:

That is a fall of about two-thirds in under three months, in single-day steps: 18.3% on 8 June, 8.0% on 10 June, 21.4% on 15 June, 29.5% on 22 June and 25.8% on 27 July. The price barely moved on any of those days.

So the yield gap over private banks, a median of 1.38 percentage points since March 2021, is now 0.12. Before June 2026 it was last that narrow on 13 June 2022, when PSU bank yields were still climbing from almost nothing: they averaged 0.05% in 2020 and 0.32% in 2021.

A drop like this usually means earlier payments have left the trailing twelve months before new ones are counted, or the index's members have changed, or the banks have paid less. The published ratio cannot say which.

Price, earnings and book

A year earlier, on 22 August 2025, the index closed at 6,998.10 at a P/B of 1.13 and a P/E of 7.21.

• Price: up 22.0%.
• Earnings behind the index: up about 14.6%.
• Book behind the index: up about 16.9%, much of it in three steps in the first week of June 2026.

The index is 13.6% below its February record and 8.5% above its 30 March close of 7,873.45.

What this does not tell you

The yield figure may not be settled. A trailing yield that falls by two-thirds in weeks, with no move in price, reflects a change in the dividend figure NSE divides by. Whether that is timing, membership or a real cut cannot be told from the ratio alone.

Book value is only as good as the loans behind it. A P/B near 1 is cheap only if the book is sound.

It is a narrow index. It holds only state-owned banks, so a few results can move its ratios.

This is the index, not a fund. Banking and PSU-themed funds hold their own mix.

Where to go from here

The Private Bank page has the comparison series. Earlier in the year, our March post set PSU banks beside private ones when the gap was wider on yield. The guides on infrastructure and PSU funds and banking and financial services funds cover the fund side.