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Informist, Wednesday, Jul. 8, 2026

 

By Priyasmita Dutta and Sagar Sen

 

NEW DELHI – The finance ministry is planning to hold an elaborate conclave for public sector banks in the second half of July to brainstorm reforms in the sector and take stock of past decisions, a senior ministry official said on Wednesday. The conclave could be held over two days and will be chaired by Finance Minister Nirmala Sitharaman, with participation from senior finance ministry officials and the top management of public sector banks, the official told Informist. 

 

During the meeting, Sitharaman is likely to take stock of inflows seen from the Reserve Bank of India's swap facility to raise fresh foreign currency non-resident bank deposits, the official said. RBI Governor Sanjay Malhotra had last month announced a slew of measures to attract foreign inflows and support the rupee at a time when the Indian currency was grappling with its worst crisis in over a decade. Among the various measures he announced was a facility to cover the full hedging costs for banks raising fresh three- to five-year FCNR(B) deposits till Sept. 30. The swap facility will remain open till Oct. 16 for deposits mobilised between Jun. 8 and Sept. 30.

 

"The ministry will review the progress of the FCNR(B) deposit inflows and take feedback from bankers on the issues faced," the official said. While government sources had earlier said that there was no estimate readily available on how much inflows are expected, market participants said that the tool is expected to draw around $43 billion in inflows. 

 

The banking conclave, which will be similar to the one held last year – 'Manthan', may also see participation from a host of consulting agencies like Boston Consulting Group, a second official said. At the meeting, public sector banks' financial performance for the first quarter of FY27 may also be reviewed, both officials said. Collectively, the 12 public sector banks, including the State Bank of India, reported a net profit of INR 1.98 trillion in FY26, with their aggregate business reaching nearly INR 283.3 trillion as of Mar. 31. Public sector banks had collectively posted a net profit of INR 1.78 trillion in FY25, up 26%.

 

During the conclave, government officials, bankers and industry experts may also discuss ways to have at least two globally competent banks by 2047, the second official said. According to S&P Global Market Intelligence, SBI is the 45th largest bank by assets in the world. Private sector lender HDFC Bank is the second Indian bank among the top 100 largest banks, at 76th place. During 'Manthan', there were significant discussions on this topic, with government officials suggesting that banks diversify operations to gain expertise in other segments of the banking sector to be able to become globally relevant and gain prominence. 

 

In this regard, the finance minister had also said in November that India needs lots of "big and world-class banks" and the government has already begun work on it by initiating discussions with the central bank and state-owned banks to see how PSU bank amalgamation could be taken forward. "It's not by creating (big banks) from among those which exist today just by amalgamation, that can also be one of the route, but you need an ecosystem and also an environment, in which more banks can operate and operate to grow," Sitharaman had said at the 12th SBI Banking & Economic Conclave in Mumbai. "Some work is happening on it," she had said.

 

Informist had reported in May 2024, citing a senior finance ministry official, that the government was exploring the option of merging PSU banks to have better and bigger banks. The plan to merge PSU banks was to benefit from the improvement in profitability of public sector lenders over the last few years, the official had said.

 

Interestingly, before last year's conclave 'Manthan', the finance ministry had organised a similar event in 2016 and called it 'Gyan Sangam'. During the two-day event, separate groups were formed to brainstorm banks' non-performing asset management, restructuring (mergers and acquisitions), credit growth, technology and risk management. After the meeting, former finance minister Arun Jaitley had said that bankers had supported the proposal of consolidation in order to have strong banks rather than a large number of banks.

 

Following up on the key takeaway from the event, the Narendra Modi government carried out mammoth PSU bank mergers since 2017. The process was kick-started by merging five associate banks of State Bank of India--State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad and State Bank of Patiala-- along with Bharatiya Mahila Bank into State Bank of India in 2017.

 

Thereafter, the government in August 2019 announced a mega merger plan for 10 public sector banks. Effective Apr. 1, 2020, Oriental Bank of Commerce and United Bank of India were merged into Punjab National Bank, Andhra Bank and Corporation Bank were merged into Union Bank of India, Syndicate Bank was merged with Canara Bank, and Allahabad Bank was merged into Indian Bank.  End

 

Edited by Avishek Dutta

 

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