Consolidation in Public Sector Banks - The government aims to accelerate consolidation in public sector banks to create larger, world-class banks by 2047, as stated by Finance Minister Nirmala Sitharaman [1][2] - Currently, there are 12 public sector banks, with only the State Bank of India (SBI) ranked among the global top 50 banks by assets, positioned at 43rd [2] Historical Context of Consolidation - The government has previously conducted two rounds of consolidation, reducing the number of public sector banks from 27 in 2017 to 12 in 2019 through major mergers [3][4] - Notable mergers include the consolidation of United Bank of India and Oriental Bank of Commerce with Punjab National Bank, and others involving Syndicate Bank, Allahabad Bank, and Andhra Bank [4][5] Financial Performance of Public Sector Banks - In the first half of FY25-26, the 12 public sector banks reported a net profit of ₹93,675 crore, a 10% increase from ₹85,520 crore in the same period of the previous fiscal year [7] - The net profit for public sector banks is projected to exceed ₹2 lakh crore by the end of FY26, following a record profit of ₹1.78 lakh crore in the previous financial year, which was a 26% increase from ₹1.41 lakh crore in FY24 [8] Foreign Investment Trends - The private sector banking space has seen significant foreign capital inflow, exemplified by Sumitomo Mitsui Banking Corporation acquiring a 20% stake in Yes Bank for ₹13,483 crore [9] - Emirates NBD Bank also announced plans to acquire a 60% stake in RBL Bank for ₹26,853 crore, indicating the attractiveness of India's financial institutions to foreign investors [10] Regulatory Developments in the Insurance Sector - The passage of the Sabka Bima Sabki Raksha Bill allows for 100% foreign direct investment in the insurance sector, which is expected to attract new capital and enhance competition [11][12] - The removal of the 18% GST rate on individual policy premiums has improved affordability and access to insurance products [12][13]

Core Viewpoint - The Reserve Bank of India (RBI) Governor Sanjay Malhotra expressed optimism that India will soon have more domestic banks in the top 100 global banks list due to the rapid growth of both public and private sector banks [8][9]. Group 1: Banking Sector Growth - The cumulative profit of public sector banks reached a record level of ₹1.78 lakh crore for the fiscal year ending March 2025, marking a growth of 26% compared to the previous year [2][9]. - Currently, only two Indian banks, State Bank of India (SBI) and HDFC Bank, are ranked among the world's top 100 banks, positioned at 43rd and 73rd respectively [8][9]. Group 2: Government Initiatives - The Indian government has previously undertaken two rounds of consolidation in the banking sector, reducing the number of public sector banks from 27 in 2017 to 12 by August 2019 through major mergers [7][9]. - As part of its privatization efforts, the government sold a controlling 51% stake in IDBI Bank to Life Insurance Corporation (LIC) in January 2019, and plans for further strategic sales are underway [7][9]. Group 3: Future Prospects - Finance Minister Nirmala Sitharaman emphasized the need for larger, world-class banks and indicated that discussions with the RBI and lenders are ongoing to create a conducive environment for bank growth [6][9]. - The government is working on establishing a more dynamic ecosystem for banks to operate and grow, which is seen as essential for achieving the goal of having more banks in the global top 100 [6][9].

Group 1 - The Indian government is focusing on the need for large, world-class banks and is in discussions with the Reserve Bank of India (RBI) and lenders to enhance the banking sector [1][2] - The Finance Minister expressed confidence that a reduction in GST rates would stimulate demand and initiate a positive investment cycle [1] - The government has been actively pursuing the privatization of IDBI Bank, having sold a 51% stake to Life Insurance Corporation of India (LIC) in January 2019, and is now looking to sell a total of 60.72% stake [3][4] Group 2 - The Securities and Exchange Board of India (SEBI) has approved the reclassification of LIC as a public shareholder, facilitating the strategic divestment of IDBI Bank [5] - The government has undertaken significant consolidation in the public sector banking space, reducing the number of public sector banks from 27 in 2017 to 12 by August 2019 through major mergers [6][7] - Infrastructure development remains a key focus for the government, with capital expenditure increasing fivefold over the past decade [8]

Core Viewpoint - The Indian government emphasizes that the privatization of state-owned banks will not hinder financial inclusion and national interest, despite past nationalization efforts not fully achieving their objectives [9][10]. Group 1: Nationalization and Its Impact - Nationalization in 1969 aimed to enhance priority sector lending and government programs, but it led to unprofessional management in public sector banks [9][10]. - Despite 50 years of nationalization, the intended objectives were not completely realized, but professionalization of banks has led to better outcomes [9][10]. Group 2: Privatization Efforts - The government sold a controlling 51% stake in IDBI Bank to the Life Insurance Corporation (LIC) in January 2019, with plans for further strategic sales [6][10]. - In October 2022, the government and LIC invited Expressions of Interest (EoI) for privatizing IDBI Bank, aiming to sell a total of 60.72% stake [6][10]. - Multiple EoIs were received in January 2023, and the Securities and Exchange Board of India (Sebi) approved the reclassification of LIC as a public shareholder in August 2025 [7][10]. Group 3: Consolidation of Public Sector Banks - The government undertook a significant consolidation of public sector banks, reducing their number from 27 in 2017 to 12 by August 2019 through major mergers [8][9]. - Effective April 1, 2020, several banks were merged, including United Bank of India and Oriental Bank of Commerce with Punjab National Bank, and others with Canara Bank and Indian Bank [9].