India has set an ambitious goal to have at least two public sector banks (PSBs) rank among the world's top 20 by 2047, aligning with the nation's "Viksit Bharat" (Developed India) vision. This was a key topic of discussion at the recent PSB Manthan 2025, a two-day conclave organized by the Department of Financial Services. Currently, State Bank of India (SBI) holds the 43rd position globally in terms of assets, while HDFC Bank is ranked 73rd.

The focus is on achieving this goal through organic growth, rather than mergers or forced consolidation. This implies that the government aims to scale up PSBs by enhancing their business and market capitalization naturally.

Several key areas are being targeted to strengthen PSBs and prepare them for future growth. These include:

• Strengthening corporate governance: Improving the way PSBs are managed and directed is crucial for building investor confidence and ensuring sustainable growth.
• Improving customer experience: Enhancing service quality, personalization, and grievance redressal mechanisms are essential for attracting and retaining customers.
• Modernization through technology: Incorporating advanced technologies like artificial intelligence (AI) to improve efficiency, cybersecurity, and risk management.
• Workforce transformation: Equipping employees with the skills and knowledge needed to navigate the evolving banking landscape.
• Risk management: Fortifying risk management systems to enhance the capacity of PSBs to absorb economic shocks and maintain financial stability.
• Cybersecurity: Addressing cybersecurity threats is essential for protecting sensitive data and maintaining the integrity of banking operations.
• Increased Autonomy: Granting bank boards greater autonomy to make strategic decisions.

The PSB Manthan 2025 meeting, chaired by M Nagaraju, Secretary of the Department of Financial Services, included senior ministry officials and top executives from public sector banks, including SBI Chairman C.S. Setty and Punjab National Bank CEO Ashok Chandra. The discussions also involved Chief Economic Advisor V Anantha Nageswaran and Reserve Bank of India (RBI) Deputy Governor Swaminathan J.

The initiative is taking place against the backdrop of record profits earned by PSBs. In fiscal year 2025, the cumulative profit of all 12 public sector banks reached Rs 1.78 lakh crore, a 26% increase from the previous year. SBI contributed over 40% of these earnings, with a net profit of Rs 70,901 crore, a 16% increase. Punjab National Bank experienced the highest percentage growth in net profit at 102%, reaching Rs 16,630 crore.

The government's focus on organic growth suggests a commitment to strengthening the existing PSBs rather than resorting to mergers. This approach aims to foster a competitive environment and encourage PSBs to innovate and improve their performance independently. By focusing on the key areas mentioned above, India aims to transform its PSBs into globally competitive institutions that can contribute significantly to the nation's economic development by 2047.