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‘India needs at least 4-5 more banks like SBI’
“Banks have to grow in size and there should be a few more large banks of SBI’s size,” an IBA statement said, quoting the finance minister. SBI is India’s largest lender.
India needs four or five more large commercial banks similar in size to the State Bank of India (SBI) to meet the growing requirement of the economy, finance minister Nirmala Sitharaman said on Sunday.
“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 while delivering the keynote address at the annual general meeting of the Indian Banks’ Association (IBA).
“Banks have to grow in size and there should be a few more large banks of SBI’s size,” an IBA statement said, quoting the finance minister. SBI is India’s largest lender.
The finance minister’s statement is in line with the Union cabinet’s March 4, 2020, decision to amalgamate 10 public sector banks (PSBs) into four to enable “creation of digitally driven consolidated banks with global heft and business synergies”.
The government merged Oriental Bank of Commerce and United Bank of India with Punjab National Bank; Andhra Bank and Corporation Bank with Union Bank of India; Syndicate Bank with Canara Bank; and Allahabad Bank with Indian Bank from April 1, 2020.
While there is “no specific proposal” under consideration to amalgamate more PSBs, the Union budget 2021-22 announced the government’s intent to take up privatisation of two state-owned banks, junior finance minister Bhagwat Karad told the Lok Sabha on August 2, 2021. According to the government’s public sector policy, banking is one of the strategic sectors where PSBs will have a bare minimum presence.
According to S&P Global Market Intelligence’s annual global bank ranking of 2021, SBI fared at the 57th rank with $638.49 billion in assets, down from 55th rank last year. At the number one rank, Industrial & Commercial Bank of China has assets worth $5107.54 billion. The top four largest banks are Chinese—Industrial & Commercial Bank of China, China Construction Bank Corp, Agricultural Bank of China and Bank of China—with a combined asset value of over $17 trillion. SBI is only Indian bank to feature in the top 100 list.
The statement said the finance minister appreciated the efforts of PSBs for the smooth conduct of the amalgamation and regular banking activities despite the pandemic.
Sitharaman asked banks to be futuristic. “They should have a vision for the immediate future and for the long term also. While digitalisation could be the immediate goal, banks have to explore other unique opportunities for the future,” the statement said.
