Bank Merger : At the 12th State Bank of India (SBI) Banking and Economics Conclave held in Mumbai on Thursday, Finance Minister Nirmala Sitharaman said that India needs “large world-class banks” to meet the massive capital requirements of its rapidly growing economy. She indicated that the government is working toward launching a new wave of consolidation and expansion in the country’s banking sector.
Bank Merger : What Sitharaman Said
Sitharaman stated, “India needs many large banks, world-class banks. For this, we need to sit with the Reserve Bank of India (RBI) and the banks to discuss how they want to take it forward… work on this has already begun.”
The Finance Minister also mentioned that the government and the RBI are evaluating various options to shape the next phase of the banking sector, which may include the merger of existing banks and the establishment of new financial institutions. According to her, India’s banking system needs to become more dynamic so that it can effectively meet rising credit demand and the growing need for infrastructure financing.
She added, “We need to create an ecosystem and environment where more banks can operate and grow.”
Big Mergers May Return to PSU Banks
It is worth noting that over the past decade, the central government has consolidated several public sector banks to improve efficiency and scale. Sitharaman hinted that the upcoming reforms may go beyond mergers alone.
India has already witnessed two major waves of bank mergers. In 2017, the State Bank of India (SBI) merged its associate banks. Later in 2019, ten public sector banks were consolidated into four large banks. Due to these steps, the number of public sector banks has reduced from 27 to 12.
According to a Mint report dated October 27, the central government is preparing a new blueprint to once again merge select public sector banks and streamline their operations.
‘Soft-Touch’ Policy on AI
Speaking about technology, Sitharaman said that India is preparing to adopt a balanced regulatory approach toward Artificial Intelligence (AI). She said, “I am discussing AI and its regulation with both the RBI and NITI Aayog.”
She clarified that the government aims to promote innovation while ensuring national security and the ethical use of AI.
