India’s Big Bank Moment: Why Viksit Bharat Needs Banks of Global Scale? The face of Indian finance is set to change again as the country plans to create at least two banks that would be in a position to compete globally and rank among the top 20 worldwide. That strategic end is a central element of the “Viksit Bharat 2047” roadmap — a vision in which India funds its own ascent through world class financial institutions. These banks are seen fuelling green energy corridors and smart cities, next generation manufacturing and huge infrastructure projects as India races to become a $10 trillion economy.
The Rationale Behind Banking Consolidation
India’s banking sector has been fragmented historically, and it is weighed down by too many public sector banks (PSBs) doing the same things. They were further greased in 2020, when the number was reduced from 27 to just 12 in a new wave of consolidation that left larger institutions with stronger balance sheets and wider reaches. And yet, by aggregate assets, India’s PSBs have a combined size of about ₹171 trillion (USD 1.95 trillion) — and that’s just enough for their noses to be above the world rankings cut-off in the 15th spot occupied by Wells Fargo.
To build world-class banking champions, the government is exploring mergers of stronger mid-sized PSBs such as Bank of Baroda, Bank of India and Bank of Maharashtra to create entities with size and scale that can compete globally not just prop up struggling banks.
Beyond the United States, Why Size and Scale Matters
Huge banks are an essential source of financing for multibillion-dollar projects — and they also help move the money that powers global trade, often at a favorable cost of funding. SBI, India’s biggest lender occupies the 43rd place in the list with an asset size of USD 846 billion, which is way below those of global top 10 that have balance sheets across over USD 2.6 trillion. For India’s part, it needs to be creating big banks that can help finance its growing infrastructure, emerging industries and cross-border investments.
In addition, stronger banks are well-positioned to tap the international capital pools, direct credit flow to the priority sectors and enhance financial security of the country.
Reform Beyond Mergers — What’s Needed
Banking experts warn that consolidation alone will not be enough. To truly develop world-class banks, reforms in governance, people and technology are imperative. This comprises market-based compensation to compete for and keep elite talent; professional governance of banks to minimise political influence over them; and investment in digital technology and risk management.
Increasing the foreign investment limit in PSBs from 20% to 49%, “closer to comparatives numbers of private banks, might bring not only international expertise but crucially the capital we need”.
The Challenges Ahead
India’s big bank vision faces obstacles, such as combining technology systems, unifying cultures and aligning the risk framework across merged entities. The pace could be slowed by resistance from employee unions and concerns about loss of regional focus. There is also the danger of “too big to fail” institutions that could threaten stability if they are not carefully regulated.
But the payoffs can be game-changing: Global Indian banks can turbocharge international trade, finance world-class infrastructure and promote digital banking and “Viksit Bharat” in India itself.
Conclusion
India’s big bank moment is about far more than scaling international rankings — it suggests the scale required to drive the country’s future growth forward, improve service quality and compete globally. The financial spine of an industrial society requires consolidation, restructuring and a strategic perspective.
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