NEW DELHI: In sync with the target of getting the ‘Developed Nation’ status by 2047, the government aims to ensure that at least two public sector banks figure in the list of World’s top 20 banks. As on date, State Bank of India is the only Indian bank in the list of top 50 banks in terms of the asset size.
The issue was discussed during two day ‘Manthan’ event of public sector banks beginning in the national capital on Friday. But there seems to be no timeline for the planned upward trajectory of the banks. “For all of us, there is just one deadline and that is achieving Viksit Bharat by 2047,” said a top official.
To reach the top 20, officials and industry leaders agreed that PSBs will need to expand their scale, strengthen governance structures, adopt digital banking and artificial intelligence and build a stronger global footprint.
According to officials, consolidation is not part of the roadmap, marking a shift from the merger-driven approach seen in earlier phases of banking reforms. As on date, there are 12 public sector banks while the number was 27 till 2017. Earlier, with effect from April 1, 2020, the mega consolidation of ten PSBs took place which includes amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank, Syndicate Bank into Canara Bank, Andhra Bank and Corporation Bank into Union Bank of India and amalgamation of Allahabad Bank with Indian Bank.
Meanwhile, during the meeting, the government exhorted banks to improve CASA deposits and enhance their lending towards MSMEs and the agriculture sector. The public sector lenders have seen their CASA ratio dropping over the last one year, which is putting their net interest margins under pressure, the official said.
Even the largest lender of the country, SBI, saw a marginal decline in its CASA ratio in the June quarter to 39.36 per cent from 40.70 per cent last year and 39.97 per cent a quarter ago. Similarly, Bank of Baroda’s CASA ratio also fell 64 basis points on-quarter to 39.33 per cent in the June quarter.
The official further said that improving CASA deposits will also help banks in their lending to key sectors of the economy. During the meeting, the public sector banks were nudged to ramp up their credit to the agriculture sector as well as job-generating micro, small and medium enterprises.
On the other hand, the Ministry has asked banks to increase their lending towards the agriculture and MSME (micro, small and medium enterprise) sectors, which is the second biggest employer after the agriculture sector. The ‘Agriculture and Allied Activities’ sector has long been the backbone of the Indian economy, playing a vital role in national income and employment.
With nearly 46.1 per cent of the population engaged in agriculture and allied activities, ensuring financial security and accessible credit for farmers remains a top priority for the government. It is to be noted that institutional credit disbursement through KCC increased from ₹4.26 lakh crore in 2014 to ₹10.05 lakh crore by December 2024. Overall agricultural credit flow also rose from ₹ 7.3 lakh crore in FY13-14 to ₹25.49 lakh crore in FY23-24.
Source: The Hindu Business Line
