State owned banking: gaining policy support and investor interest

State owned banking has staged a major comeback. Finding a place among the top 25 banks in the world in terms of market cap and assets apart, state owned banks have emerged as hot stocks for domestic and international investors. In the aftermath of the global financial crisis, privatization of the financial sector, which has been the major policy thrust evident in numerous countries, took a backseat with governments taking over banking institutions and providing various forms of support ranging from capital injections to outright nationalization of the global banks adversely affected by the crisis. The current crisis also may encourage governments to keep their stakeholding in the public banks in view of the need to support the vital sectors of the economy and also pursue financial inclusion that emerged as a major policy priority. This article presents a brief perspective on the comeback of the state owned banking, and also its own transformation that led to its growing acceptance and endorsements from policymakers investors and customers.