 "Need more 'SBI-sized' banks: Nirmala Sitharaman on India's economic push")
Days after Budget 2024, Finance Minister Nirmala Sitharaman stressed the need to create more "SBI-sized" banks in India. In an interview with Livemint, Sitharaman said, "...Maybe three times the size of SBI (State Bank of India). Because SBI is also not in the top 10 (globally)."
Her statement followed after the February 1 interim budget presentation, where she had reiterated the Narendra Modi government's pledge to make India the world's third-largest economy during what would be the BJP-led NDA government's third tenure after the impending Lok Sabha elections.
SBI, the country's largest lender, has a market capitalisation of about Rs 5.8 trillion. It operates in more than 29 countries and has an asset base of over Rs 60 trillion.
2019 mega bank merger
The finance minister highlighted the Centre's effort to create larger banks during the 2019 mega-merger of multiple public sector banks. As many as ten public sector banks were merged in a bid to create four large banks.
The merger included Oriental Bank of Commerce and United Bank of India with Punjab National Bank (PNB), Syndicate Bank with Canara Bank, Andhra Bank and Corporation Bank with Union Bank of India, and Allahabad Bank with the Indian Bank.
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Need for larger banks
Experts suggest that given the economic size of India and its acceleration towards being the third largest economy, at least a couple of banks of global size are required to facilitate the growth. India currently holds the rank of fifth largest economy in the world.
"So we need large banks…and we need to create an ecosystem where banks can function professionally. Larger banks can also come into this country. So yes, we need [big banks], there's no second thought," Sitharaman told Livemint.
SBI ranked 48 globally
Notably, the SBI is ranked 48 among the top 100 global banks, according to S&P Global Market Intelligence's annual ranking 2023.
In the same list, China, the second largest economy, has four banks leading the top four ranks. Meanwhile, the world's largest economy, the United States, has two banks in the top ten spots. France also has two banks at the ninth and the 10th spot. Meanwhile, the United Kingdom and Japan have one entity in the top ten global banks list.