The Department of Financial Services (DFS) is set to organize a two-day meeting, “Manthan”, with public sector banks (PSBs) on September 12-13. The meeting, headed by DFS Secretary M Nagaraju, aims to discuss key issues such as interest rate cut transmission, credit growth, deposit mobilization, and potential consolidation in the PSB space. The goal is to transform PSBs into stronger institutions, increasing their productivity, digital capabilities, and resilience.
One of the key topics of discussion will be the exchange of ideas on consolidation in the PSB space. The previous mergers among PSBs have shown positive results, and the meeting will explore the potential for further consolidation to create global-scale banks. Currently, only two Indian banks, SBI and HDFC, are among the top 100 global banks by total assets, which is not sufficient compared to banks from China and the US.
The meeting will also focus on expanding bank credit to drive India’s ambition of becoming a $30 trillion economy by 2047. The bank credit to the private non-financial sector needs to increase from 56% of GDP to around 130%. As of June 30, 2025, credit outstanding stood at Rs 183.4 lakh crore, with a growth rate of 9.9% year-over-year. However, the credit growth has slowed down, primarily due to a decline in the growth of NBFCs and a decrease in credit growth in the services and personal loan segments.
The meeting will also touch upon reforms required to increase productivity, deepen digital and data capabilities, and build future readiness in terms of resilience and governance. The discussion will likely include the role of foreign direct investment (FDI) in India’s private banking sector, where FDI is allowed up to 74% in private sector banks and 20% in public sector banks.
Overall, the “Manthan” meeting aims to propel PSBs towards becoming stronger, more resilient, and globally competitive institutions, driving India’s economic growth and ambition. The outcome of the meeting is expected to have a significant impact on the Indian banking sector and the country’s economic development. With the government’s goal of creating a $30 trillion economy by 2047, the meeting’s discussions and decisions will be crucial in shaping the future of India’s banking sector.