Nirmala Sitharaman confirms fresh wave of bank mergers, says 'India needs a lot of big, world-class giants'

Speaking at an event of CNBC TV 18, Sitharaman said, "We will need to sit and talk with the Reserve Bank of India (RBI) and banks on how they want to take it forward, and also discuss with the RBI how they want to build larger 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 added, hinting at an effort that would go much beyond the bank consolidation.

In 2020, 10 public sector banks were merged into four larger entities in the last round of bank consolidation.

On fiscal discipline, the Finance Minister said as quoted by the broadcaster, "We are ensuring fiscal balance is not threatened while growth aims are maintained."

"We should learn from the past and not be fearful of steps to be taken," Sitharaman said, highlighting India's fiscal resilience despite the volatile global economy.

Why it matters?

• Larger banks can achieve economies of scale, have stronger balance sheets, and better compete globally.
• A strengthened banking sector helps underpin credit growth, especially for infrastructure and industry, which is central to India’s economic ambitions.
• Consolidation also signals the government’s willingness to rethink structures in the public banking sector, potentially affecting governance, staffing, regional presence and service delivery.