India Aims to Establish Two Globally Competitive Banks Under Viksit Bharat Vision

India is setting its sights on creating two banks that can compete globally, aiming to place them among the top 20 banks worldwide. This initiative is part of the Viksit Bharat 2047 vision, which seeks to transform India into a developed nation. A senior official revealed that this topic was a key focus during the first day of the PSB Manthan 2025 event, organised by the Department of Financial Services.

Currently, State Bank of India (SBI) ranks 43rd globally in terms of assets, while HDFC Bank holds the 73rd position. The discussion centred on how to organically elevate at least two Indian banks into the top 20 list. The official clarified that there was no talk about merging public sector banks during these discussions.

PSB Manthan 2025 and Banking Reforms

The PSB Manthan 2025 meeting was chaired by M Nagaraju, Secretary of the Department of Financial Services. It included senior ministry officials and top executives from public sector banks like SBI Chairman CS Setty and Punjab National Bank CEO Ashok Chandra. Chief Economic Adviser V Anantha Nageswaran and RBI Deputy Governor Swaminathan J were among those who addressed the gathering.

During the meeting, discussions also focused on preparing public sector banks for future growth, aligning with the Viksit Bharat 2047 goal. The backdrop for this event was the record profit of Rs 1.78 lakh crore achieved by PSU banks in FY25, marking a 26% increase from the previous year.

Profit Growth and Future Challenges

In FY25, all 12 public sector banks collectively earned Rs 1.78 lakh crore in profit, up from Rs 1.41 lakh crore in FY24. SBI contributed over 40% of these earnings with a net profit of Rs 70,901 crore, a 16% increase from the previous fiscal year. Punjab National Bank saw the highest percentage growth in net profit at 102%, reaching Rs 16,630 crore.

The meeting also addressed enhancing the autonomy of bank boards to improve decision-making efficiency. Discussions covered various banking sector issues, including reforms implemented by the government in recent years.

Asset Quality and Diversification

The Reserve Bank of India's asset quality review in 2015 led to a peak in non-performing assets by 2018, followed by a decline. However, there remains room for improvement in asset quality, and efforts are needed to maintain a low NPA ratio. Diversifying operations could help PSU banks gain global relevance amid uncertainties.

Challenges such as IT issues, cyber-security threats, customer service, and grievance handling were also discussed. The finance ministry had previously organised a similar event in 2017, where EASE reforms were introduced during PSB Manthan.

EASE Reforms and Future Directions

The last PSB Manthan took place in April 2022 under DFS guidance to advance EASE reforms further. Six working groups were formed to examine public sector banks' operations and suggest improvements in customer service, digitisation, HR incentives, corporate governance, and collaboration.

This ongoing effort reflects India's commitment to strengthening its banking sector and achieving its ambitious Viksit Bharat goals by enhancing competitiveness and operational efficiency.

With inputs from PTI