India needs big and world-class banks, says Nirmala Sitharaman
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Union Minister for Finance and Corporate Affairs Nirmala Sitharaman
| Photo Credit:
@nsitharamanoffc X/ANI Photo
Finance Minister Nirmala Sitharaman emphasized India’s need for robust, globally competitive banks during her address at the 12th SBI Banking and Economics Conclave 2025 on Thursday. She confirmed ongoing discussions with the Reserve Bank of India and financial institutions to achieve this objective.
Sitharaman urged lenders to expand credit accessibility for industries, expressing confidence that GST rate reductions would stimulate demand and catalyze private investments.
She highlighted the necessity for India to develop large-scale, world-class banking institutions, noting that collaborative efforts with the RBI and banks are already underway.
Privatisation and reforms
The government initiated its privatization strategy by transferring a 51% controlling stake in IDBI Bank to Life Insurance Corporation of India (LIC) in January 2019. This was followed by announcements from both the government and LIC regarding the strategic divestment of their combined shares.
In October 2022, expressions of interest were invited for selling 60.72% of IDBI Bank’s stake—30.48% held by the government and 30.24% by LIC. Multiple bids were received by January 2023.
In August 2025, SEBI sanctioned LIC’s reclassification from promoter to public shareholder post-divestment, finalizing the bank’s privatization framework.
Bank mergers and scale-up
The government executed significant public sector bank consolidation, reducing their count from 27 in 2017 to 12 through mergers completed in 2019-2020. Notable consolidations included:
United Bank of India and Oriental Bank of Commerce merging with Punjab National Bank (April 2020); Syndicate Bank combining with Canara Bank; Allahabad Bank uniting with Indian Bank; and Andhra Bank with Corporation Bank merging into Union Bank of India.
Earlier in 2019, Dena Bank and Vijaya Bank were integrated into Bank of Baroda, while five SBI associate banks and Bharatiya Mahila Bank joined State Bank of India.
Sitharaman reiterated the government’s infrastructure focus, noting a fivefold increase in capital expenditure over the past decade.
Published on November 6, 2025
