Finance Minister Nirmala Sitharaman on Thursday (November 6) confirmed that the government has begun work on the next phase of public sector bank (PSB) consolidation. She said India now needs several big, world-class banks to support the requirements of a fast-growing economy.
Speaking at an event in Mumbai, the minister said discussions have already started with the Reserve Bank of India (RBI) and various banks. “Work has commenced. We are discussing with the RBI and banks. This is not just about amalgamation. We need an environment where banks can operate and grow,” she said.
Next Phase of Bank Consolidation Underway
Sitharaman’s statement is the first clear confirmation that the government is preparing a new round of bank mergers. The last major consolidation took place in 2020, when 10 public sector banks were merged into four, reducing the total number of PSBs from 27 to 12.
She emphasised that the new phase may also involve privatisation of some PSBs, along with mergers. “India needs a lot of big, world-class banks,” she said, adding that decisions will be taken in consultation with the RBI.
Banks Need to Boost Credit Flow Amid Global Uncertainty
The Finance Minister highlighted that the global economy is currently facing significant challenges, including Slower globalisation, Fragile supply chains, Climate-related costs, Exchange rate volatility and Globally driven inflation. In this environment, she said it is important for banks to deepen and widen credit flow to support businesses and individuals.
Sitharaman said India remains committed to maintaining fiscal balance while also supporting growth. She stressed that reforms must continue across sectors, including in the judiciary and state governments, to strengthen India’s economic resilience.
Privatisation of Banks Will Not Harm Financial Inclusion
Earlier this week, while speaking at the Delhi School of Economics, Sitharaman said the privatisation of banks will not affect financial inclusion. She explained that keeping banks fully under government control for decades had prevented them from becoming professional institutions, often forcing the government to infuse capital repeatedly. Finance Minister Nirmala Sitharaman on Tuesday said that privatisation of state-owned banks would not hurt financial inclusion and national interest. She said that the bank nationalisation done in 1969 has not yielded the desired result as far as financial inclusion was concerned. Click here to read this news in detail.
No Ban Planned on F&O Trading
The minister also addressed concerns regarding a possible crackdown on futures and options (F&O) trading. She clarified that the government is not planning to shut down or restrict F&O markets. Instead, the focus is on removing roadblocks and ensuring that investors understand the risks involved.
Her remarks align with recent statements by SEBI Chairman Tuhin Kanta Pandey, who said weekly F&O expiries cannot be removed. SEBI has taken several steps over the past year to protect small traders from excessive speculation, which has slowed the growth of small-ticket F&O trading.
Need to Build Strong Domestic Capabilities
Sitharaman noted that global instability is a reminder that India must strengthen its domestic economy, develop new trade partnerships, and build strong institutional capacity. She said, “To sustain high growth, India must invest in its people.” She emphasised the importance of upskilling and reskilling the workforce to meet the needs of new technologies and improve job quality.
India Must Choose Its Own Path to Economic Self-Reliance
According to the minister, a “one-size-fits-all” approach cannot work for a country as large and diverse as India. She said policies should reflect India’s own needs and priorities across sectors such as Agriculture and farmers, MSMEs, Leather and textiles, Tourism, Technology and advanced manufacturing.
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