Let me talk about the PSU banking space first before getting into SBI and PNB specifics. PSU Banking index touched a 15-year low on 19 May and SBI touched a 4-year low.

PSU banks have borne the brunt of fears that the growth slowdown could lead to a spate of defaults and PSU banks could be the most vulnerable.

In the last one month, the PSU Banking Index is down by 20% compared to the Nifty correcting by just 3.7%. PSU banks were also disappointed that the finance minister announced the suspension of IBC and insolvency proceedings for a period of one year, which is credit negative.

While PNB is very vulnerable to NPA problems and best avoided, SBI may still be a good choice if you add up the value of its insurance and card business separately. You are getting banking for a song.