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Informist, Thursday, Nov. 6, 2025

 

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--Sitharaman:Bk credit needs to be available,paperwork needs to be simplified 
--Sitharaman: Banks have to be lot more proactive, widen customer base 
--Sitharaman on PSU bk merger: Talking to RBI, bks to have big bks in India 
--Sitharaman on PSU bank merger: Some work happening on it 
--Sitharaman on PSU bank merger: India needs a lot of big banks 
--Sitharaman: GST reforms kickstarted biggest virtuous capex cycle 
--Sitharaman: Need to maintain fisc prudence to keep inflation in check 
--Sitharaman: Banks need to continue with giving credit 
--Sitharaman: System driven lending process needs to continue 
--Sitharaman: Economic self-reliance needs fincl inclusion, fiscal prudence 
--Sitharaman: Fiscal prudence key for Viksit Bharat aim 
--CONTEXT: Finance Minister Sitharaman speaking at SBI banking & econ event 
--Sitharaman: Need states to focus on fiscal prudence for econ self reliance
--SBI Setty: Would be good if govt raises FDI limit for PSU bks to 49% 
--SBI Setty: SBI to feature among top 10 global banks by 2030 

 

NEW DELHI – India needs lots of "big and world-class banks" and the government has already begun work on it by initiatig discussions with the Reserve Bank of India and banks to see how public sector bank amalgamation can be taken forward, Finance Minister Nirmala Sitharaman said Thursday. "Some work is happening on it," she said. 

 

"We are discussing with RBI, we are discussing with banks. 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 said at the 12th SBI Banking & Economic Conclave in Mumbai. 

 

Informist had reported in May 2024, citing 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 two years, the official had said.

 

The Narendra Modi government has carried out mammoth PSU bank mergers since 2017. The process was kickstarted 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. 

 

Collectively, the 12 public sector banks, including State Bank of India, posted a record net profit of INR 1.78 trillion for 2024-25 (Apr-Mar), up 26% on year. 

 

In terms of global scale, according to S&P Global Market Intelligence, SBI is the 43rd largest banks by assets in the world. Private sector lender HDFC Bank is the second Indian bank in the top 100 largest banks, at 73rd place. SBI Chairman C.S. Setty, who was also present at the event Thursday, said that India's largest lender will feature in top 10 global banks by 2030. SBI also touched $100 billion market capitalisation Thursday, he said. 

 

SBI had reported a net profit of INR 201.60 billion for the September quarter, including an exceptional gain of INR 45.93 billion from its 13.18% stake sale in YES Bank Ltd. The bottom line rose 10% on year and 5.2% on quarter. On Thursday, shares of the bank ended 0.3% higher at INR 960.75 on the National Stock Exchange.  

 

Speaking about banking sector reforms, Setty said government should look at raising the foreign direct investment limit in PSU banks to 49% from the current 20%. The hike in FDI limit will help bring more parity between public and private sector banks. Private banks can have up to 74% of their equity capital from foreign investors. With 51% stake, the government can continue to retain the identity of public sector entity of PSU banks. Foreign capital will also help in building larger and globally competitive lenders.

 

In her suggestions to the banking industry, Sitharaman said that banks need to be a lot more pro-active and must widen its customer base, with the continued focus on extending credit to the economy. "Industry, especially MSMEs (micro, medium, and small enterprises), need timely and affordable finance. Deepening our capital markets, promoting risk capital, and easing credit access will be crucial to sustaining entrepreneurship and innovation-led growth," the finance minister said.

 

She also said that system-driven lending process should continue, while efforts need to be put by banks to simplify paperwork. She also urged the industry to work on ways to overcome language barrier in bank-customer communication, and to that extent, asked human resource managers to deploy employees who can communicate in local language in respective bank branches. 

 

"Fiscal prudence, financial inclusion, and a robust financial and banking ecosystem will ensure that growth remains broad-based and sustainable," Sitharaman said. Fiscal prudence, which is key for Viksit Bharat aim, needs states' attention as well for building economic self-reliance, she said. "Balancing growth spending with fiscal stability ensures macroeconomic resilience, keeps inflation in check, and preserves investor confidence in India's long-term growth story," the finance minister said. 

 

Sitharaman also said that the government's goods and servvices tax reforms which took effect on Sept. 20 kickstarted private capital expenditure spurt with companies seeing confidence in consumption demand.  End

 

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

 

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