Because most of them are hiding dirty secrets or atleast that's the wider perception. I have been cautioning against PSU Banks for a while now because of the very same reason.
Today we saw the first evidence of that in case of J&K Bank (Revision: which is a private sector bank). The stock collapsed 20% to close at 1483 after following newspaper report that JK Bank concealed Rs 2500 crore stressed loans.
Here's J&K Bank weekly chart
The Sell off in J&K Bank is just the start and the stock is avoid.
Most of these PSU Banks are just no no for majority of investors because you never know which one will collapse next. NPAs are for real and no one knows the extent of the problem.
The blogpost is purely for educational purpose only