After six-year pause, India set to revive PSB consolidation by fiscal-end: report

In line with the Viksit Bharat 2047 vision, the Centre hopes the merger process will produce “champion banks” capable of supporting India’s projected rise as the world’s third-largest economy by 2027-28.

India is reportedly set to revive the consolidation of public sector banks (PSBs) after a six-year pause, with the first round of mergers expected to be completed by the end of the current financial year.

The initial phase is likely to see three to four smaller PSBs merged with larger counterparts, followed by a medium-term plan to combine some of the newly created entities to form stronger, more competitive banks, according to a Financial Express report.

The phased consolidation is aimed at creating at least two PSBs capable of ranking among the top 20 global banks. This reflects India’s growing prominence in the global economic landscape.

The move aligns with the government’s 2021 public sector enterprises (PSE) policy, which seeks to optimise state involvement in strategic sectors, including banking.

Analysts cited in the report have stated that the mergers will further fortify the banking system’s capacity to support high-value lending, improve resource mobilisation, and adopt best practices across amalgamating entities.

SBI, already ranked 43rd globally in terms of assets, and other large banks like HDFC Bank are examples of how scale can bolster competitiveness.

In comparison, China already has several banks in the top 10 globally, highlighting the scope for India to expand its banking footprint internationally.

Officials, cited by Financial Express, noted that the consolidation will also strengthen financial inclusion, allowing banks to extend services to underserved regions while improving cost efficiency and risk management.

In line with the Viksit Bharat 2047 vision, the Centre hopes the merger process will produce “champion banks” capable of supporting India’s projected rise as the world’s third-largest economy by 2027-28.