Canara Bank & Union Bank: Whenever the big giants in the Indian banking landscape are discussed, the focus often shifts to SBI or Bank of Baroda. However, in early 2026, two names have emerged that market experts are calling “dark horses”—Canara Bank and Union Bank of India. Recent Q3 FY26 results and aggressive retail strategies have made it clear that these banks are no longer just part of the crowd, but are poised to lead.
Synergy is now visible on the ground
The 2020 mega-merger saw the merger of Syndicate Bank with Canara Bank, and Andhra Bank and Corporation Bank with Union Bank. After the challenges of integration in the initial years, these banks are now reaping the benefits of real synergy in 2026.
Canara Bank has significantly reduced its cost-to-income ratio by improving its operational efficiency. Moving to a common technology platform like Finacle has improved the banking experience for customers and made cross-selling easier. Meanwhile, Union Bank has leveraged its vast network to improve its low-cost deposit (CASA) ratio by 140 basis points, proving to be a major game-changer for its profitability.
Aggressive penetration in retail loans
The biggest secret to the success of both banks is their RAM (Retail, Agri, MSME) strategy. Union Bank recorded a robust growth of 21.67% in retail loans in the recent quarter. The bank’s focus is now on home loans and vehicle loans, where risk is lower, and recovery is better.
Canara Bank is not far behind; It aims to have 58% of its total assets in the RAM sector. Through specialized products like ‘Canara Heal’ (healthcare finance) and ‘Canara Angel’ (women-centric banking), the bank has directly addressed customer needs. Digital lending has been accelerated to such an extent that personal loans are now approved within minutes.
Record Profits and Falling NPAs
Data shows that these banks are now in their best position. Union Bank’s net profit crossed ₹5,017 crore in Q3 FY26, while its net NPAs have fallen to 0.94%. Canara Bank is in a similarly strong position, with its share price touching a high of ₹160 in January 2026.
Market analysts believe that Canara Bank’s plan to list its subsidiaries (Canara Robeco and Canara HSBC Life Insurance) will pave the way for the bank to raise significant capital in the future. This additional capital will help the bank grow its loan book without government assistance.
Stability and Growth
Canara Bank and Union Bank are now in a phase of structural revival. They have not only cleaned up their past bad loans but are also giving private banks tough competition with new technology and aggressive marketing. If you are looking for stability and rapid growth in the PSU banking sector, these two ‘dark horses’ should definitely be on your watchlist.