Finance Minister Nirmala Sitharaman said that India requires a lot more large sized banks similar in size to the State Bank of India (SBI) to meet the growing needs of the country in the path of making a smart recovery post pandemic disruptions.
Speaking at the 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 centers of the country are covered with at least one physical or digital banking presence.
“The way in which the economy is shifting to a different plane altogether, the way in which industry is adapting, so many new challenges keep arising. To address these challenges, we need not just more, but bigger banks,” she said.
The finance minister’s statement is in line with the Union cabinet’s last year decision to amalgamate 10 public sector banks (PSBs) into four to enable “creation of digitally driven consolidated banks with global heft and business synergies”.
“One of the driving forces for the amalgamation (of banks) was that we need to scale up banking to meet the new changing and growing requirements of the economy. But that was thought of even before the pandemic. Now all the more reason why we would need four or five SBIs in the country,” Sitharaman added further.
Appreciating the efforts of bankers to carry out smooth consolidation exercises during the challenging time of the pandemic, the Finance Minister said it did not cause inconvenience to the customer and there was no aberration.
“I commend that you ensured that amalgamation did not inconvenience customers, you ensured that systems of different banks spoke to each other, you have kept yourselves available during the pandemic in serving customers, while also ensuring that banks’ amalgamation happened without friction, without aberrations”, the minister said.
Sitharaman also underlined the importance of seamless and interconnected digital systems in creating a sustainable future for the Indian banking industry.
She said that Indian economy is at a critical stage of a reset and banks would form the backbone for it by providing best of the financial services.