India to target two PSBs in top 20 global banks as part Viksit Bharat 2047 plan

India is looking to scale up at least two public sector banks (PSBs) to become one of the top 20 banks in the world by 2047, a senior government official from the financial services department said on Friday.

The official said that scaling up the size of public sector banks was top of the agenda for the two-day PSB Manthan 2025, which began in Delhi today.

“We currently only have State Bank of India, which ranks 43rd in asset size, in the list of top 50 global banks. The Viksit Bharat road map that has been finalised by the government aspires to take at least two PSBs into the top 20 global banks. The PSB Manthan will discuss and carve the road map for this scaling up that will require both growth in business and acquisition and adoption of advanced technical expertise that has become the hallmark of several global foreign banking operations,” the DFS officials told mediapersons while briefing about the PSB Manthan 2025. The official spoke on the condition of anonymity as the discussions were ongoing and a clearer plan would only emerge after completing the discussions.

The government began creating large banks in India in 2019 when it decided to merge several public sector banks to scale them up.

In 2019, the government decided to merge at least 10 public sector banks to create four large banks. Accordingly, in 2020, Oriental Bank of Commerce (OBC) and United Bank of India (UBI) were merged with Punjab National Bank (PNB) to create the second-largest bank in India. Canara Bank and Syndicate Bank became the fourth largest lender, while Union Bank of India, Andhra Bank and Corporation Bank’s merger created the fifth largest PSB in India. Also, Allahabad Bank was merged with Indian Bank to create the seventh-largest bank.

Seven PSBs

Following the consolidation, there are now seven large public sector banks and five smaller ones. There were as many as 27 public sector banks in 2017.

The official said that though no decision has been taken, the growth, scale, and size of banks will be expanded organically, indicating that further consolidation may not be on the agenda for now.

Experts suggest that an economy of the size of India, which is set to become the third largest globally, would require at least a couple of really big banks of global size and scale to facilitate this growth. At present, the country does not have a single global-scale bank.

On its first day, the PSB Manthan Bank also discussed how banks can improve the overall customer experience and work towards credit growth in the agriculture and Micro, Small, and Medium Enterprises (MSME) sectors.

The manthan will also discuss governance standards in banks and the composition of boards.