Finance Minister Nirmala Sitharaman on Thursday said India needs large, world-class banks to support its expanding economy, adding that the government is in talks with the Reserve Bank of India (RBI) and lenders to build scale and strengthen the sector.
Speaking at the 12th SBI Banking and Economics Conclave 2025, Sitharaman urged banks to deepen and widen credit flow to industries, expressing confidence that demand spurred by GST rate cuts would trigger a virtuous investment cycle.
“India needs a lot of big and world-class banks,” she said. “The government is looking at this and work has already commenced. We are discussing with the RBI. We are discussing with banks.”
The minister’s comments come amid the Centre’s continuing efforts to consolidate and reform public sector banks and advance the privatisation of IDBI Bank.
As part of its divestment plan, the government in January 2019 sold its 51% stake in IDBI Bank to Life Insurance Corporation of India (LIC). Later, the two shareholders invited expressions of interest for a strategic sale of their combined 60.72% stake — 30.48% held by the government and 30.24% by LIC. In January 2023, the Department of Investment and Public Asset Management (DIPAM) received multiple EOIs for the sale.
In August 2025, market regulator Sebi cleared the reclassification of LIC as a public shareholder from promoter once the strategic divestment is completed, paving the way for the sale of the lender.
The government has also completed a major round of bank mergers since 2019, reducing the number of public sector banks to 12 from 27 in 2017. The consolidation saw United Bank of India and Oriental Bank of Commerce merged with Punjab National Bank, Syndicate Bank with Canara Bank, Allahabad Bank with Indian Bank, and Andhra Bank and Corporation Bank with Union Bank of India.
Earlier mergers included Dena Bank and Vijaya Bank with Bank of Baroda, as well as the integration of five associate banks of SBI and Bharatiya Mahila Bank with the State Bank of India.
Sitharaman emphasised that infrastructure creation remains a core priority for the government, with capital expenditure rising fivefold over the past decade.
Speaking at the 12th SBI Banking and Economics Conclave 2025, Sitharaman urged banks to deepen and widen credit flow to industries, expressing confidence that demand spurred by GST rate cuts would trigger a virtuous investment cycle.
“India needs a lot of big and world-class banks,” she said. “The government is looking at this and work has already commenced. We are discussing with the RBI. We are discussing with banks.”
The minister’s comments come amid the Centre’s continuing efforts to consolidate and reform public sector banks and advance the privatisation of IDBI Bank.
As part of its divestment plan, the government in January 2019 sold its 51% stake in IDBI Bank to Life Insurance Corporation of India (LIC). Later, the two shareholders invited expressions of interest for a strategic sale of their combined 60.72% stake — 30.48% held by the government and 30.24% by LIC. In January 2023, the Department of Investment and Public Asset Management (DIPAM) received multiple EOIs for the sale.
In August 2025, market regulator Sebi cleared the reclassification of LIC as a public shareholder from promoter once the strategic divestment is completed, paving the way for the sale of the lender.
The government has also completed a major round of bank mergers since 2019, reducing the number of public sector banks to 12 from 27 in 2017. The consolidation saw United Bank of India and Oriental Bank of Commerce merged with Punjab National Bank, Syndicate Bank with Canara Bank, Allahabad Bank with Indian Bank, and Andhra Bank and Corporation Bank with Union Bank of India.
Earlier mergers included Dena Bank and Vijaya Bank with Bank of Baroda, as well as the integration of five associate banks of SBI and Bharatiya Mahila Bank with the State Bank of India.
Sitharaman emphasised that infrastructure creation remains a core priority for the government, with capital expenditure rising fivefold over the past decade.
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