At least 2 Indian banks should be in global top 20: PSB chiefs

Core Viewpoint - The executives of top public sector banks (PSBs) advocate for further consolidation in the banking sector, emphasizing the need for at least two Indian banks to be among the top 20 globally to meet the growing demands of the economy aiming for developed nation status by 2047 [1][3][14]. Group 1: Need for Large Banks - The increasing scale of operations and GDP growth necessitates the presence of large banks in India [14]. - Bankers argue that large banks are essential for underwriting significant projects, with current project sizes ranging from ₹8,000 crore to ₹15,000 crore, compared to previous sizes of ₹800 crore to ₹1,500 crore [6][5]. - The consolidation of PSBs during the pandemic has boosted confidence in managing mergers and amalgamations [4][9]. Group 2: Global Positioning - There is a consensus that India should have at least three to four large banks in the top 100 globally based on total business, market capitalization, and asset size [7]. - The need for large banks is further driven by the de-dollarization trend, which will increase the demand for substantial banking entities [6]. Group 3: Operational Efficiency - Larger banks can optimize costs, with the cost-to-income and cost-to-asset ratios improving as banks grow; in India, these ratios are between 1.5-2%, while globally they are around 1% or lower [17]. - Integration of diverse systems and human resources is critical during consolidation, and large banks can better attract and retain specialized talent in areas like risk management and technology [19][20]. Group 4: Cultural and HR Considerations - Cultural integration is vital for successful mergers, with emphasis on harmonizing the workforce and processes [21]. - Transparency and fairness in handling HR issues during consolidation are essential to ensure that all employees feel included in the process [22].