India needs at least four or five banks the size of State Bank of India (SBI), the country’s biggest lender, Union Finance Minister Nirmala Sitharaman said.
Speaking at 74th Annual General Meeting of Indian Banks’ Association at Mumbai, Sitharaman said there was an urgent need to scale up banking to meet the growing needs of the industry and also to ensure that all economic centres of the country are covered with at least one physical or digital banking presence.
“The economy is shifting to a different plane altogether,” Sitharaman said. “Even before the pandemic the driving force for amalgamation (of banks) was that India needs a lot more banks, but a lot more big banks.”
She underlined the importance of seamless and interconnected digital systems in creating a sustainable future for Indian banking industry.
The finance minister added, “Now all the more reason we would need four or five more SBIs in the country.”
Having done two rounds of bank consolidation earlier, the Central government in 2019 decided to merge six disparate and weak PSBs into four in one stroke.
Accordingly, Punjab National Bank (PNB) took over Oriental Bank of Commerce and United Bank of India; Allahabad Bank became part of Indian Bank; Canara Bank subsumed Syndicate Bank, and Andhra Bank and Corporation Bank merged with Union Bank of India. Earlier, State Bank of India (SBI) with five of its associate banks while Vijaya Bank and Dena Bank were merged with Bank of Baroda.