India plans to merge PSBs into 3-4 large banks
The Indian government is planning another round of bank mergers, aiming to combine public sector banks (PSBs) into just three or four major lenders.
This follows a big shake-up back in 2020, which had already cut the number of state-run banks from 27 down to 12.
The upcoming PSB Manthan summit will focus on strategies to drive credit growth and unlock more capital for infrastructure projects, including consultations with key infrastructure financing firms.
Fewer, larger banks could help meet infrastructure financing goals
With only SBI and HDFC Bank making it to the world's top 100 lenders, India's banking scene is still catching up globally.
The government hopes that having fewer, larger PSBs will make it easier to finance massive infrastructure goals—like the $4.5 trillion investment target by 2040—and address slow credit growth in lending to large industries (which was under 1% as of July 2024).
If this works, it could potentially mean more stable banks and better support for new businesses and jobs down the line.