FM Nirmala Sitharaman: India Needs More SBI Sized Banks
In the Interim Budget 2024, the Union Finance Minister of India has shared the visionary roadmap in which she has covered numerous topics. However, the interim budget was mainly focused on youth and women’s empowerment. But the FM has made other necessary announcements that will surely be helpful in increasing the GDP of the nation. In an exclusive interview with a renowned media publication, FM Nirmala Sitharaman emphasized the need for larger banks, three times larger than the State Bank of India (SBI). She said that the economy of India is in the phase of a structural transformation, and conventional prototypes are being challenged.
She further added that complete changes have been witnessed in the rural and urban landscapes of India, and to bring about more fundamental shifts, it is important to get access to more comprehensive data. In the wake of Atmanirbhar Bharat, many new investments and new startups have been established, which will directly or indirectly boost the Indian economy. She said that banks and businesses are preparing for new investments in the Indian economy. To make India the world’s third-largest economy, larger banks need to be made to deal with the growing needs of the economy and industry.
While answering how India will be able to achieve the vision of making India’s the third-largest economy in the world, the Finance Minister said that the nation needs to build an atmosphere in order to attract overseas banks to India. She also highlighted the need for more people in the banking sector. She said that we need to motivate people to develop an interest in the banking sector. Sitharaman said, “We need more SBI-sized banks in India. Maybe three times the size of SBI (State Bank of India). SBI is also not in the top 10 globally.
It is worth noting that SBI is the largest lender in the country, with a market capitalization of around ₹5.8 trillion and an asset base of close to ₹60 trillion. The largest public sector bank, SBI, has around 22,500 branches in the country. Speaking about the existing global expansion of SBI, it is currently present in 29 countries, and around 230 offices are established overseas along with joint venture operations. She is clear that it is not her only thought, as the central government of India has already decided to build large banks in the country in 2019. To make large banks in India, it was decided to merge other public sector banks in 2019.
With a vision of building four large banks in India, in 2019, the central government planned to merge around 10 public sector banks. In this regard, the United Bank of India and Oriental Bank of Commerce were merged with Punjab National Bank in order to become the 2nd largest bank in India in 2020. Similarly, Syndicate Bank was merged with Canara Bank with a vision of becoming the fourth-largest bank in India, behind Bank of Baroda, SBI, and Punjab National Bank. The fifth-largest lender in India has become the result of the merger of Andhra Bank, Corporation Bank, and Union Bank of India. The seventh-largest public sector bank has been created with the merger of Indian Bank and Allahabad Bank.
Due to this merger, India has five small public sector banks and seven larger ones. According to the 2017 report, India has more than 27 public sector banks. Sitharaman said, “There is no doubt; India needs more large banks. And we need to create an ecosystem where banks can function professionally. Larger banks can also come into this country. So yes, we need big banks; there is no second thought.