Summary of this article
FM Nirmala Sitharaman said India needs big and world-class banks.
Reveals the discussions with RBI and lenders has already begun.
Sebi has approved the reclassification of Life Insurance Corporation as a public shareholder.
Finance Minister Nirmala Sitharaman on Thursday said the country needs big and world-class banks, and discussions are on with the Reserve Bank and lenders in this regard. Addressing the 12th SBI Banking and Economics Conclave 2025, Sitharaman asked lenders to deepen and widen credit flow to the industry, exuding confidence that GST rate cut-driven demand would unleash a virtuous investment cycle. Stressing that India needs a lot of big and world-class banks, she said the "government is looking at this and work has already commenced. We are discussing with the RBI. We are discussing with banks".
As part of the privatisation exercise, the government in January 2019 sold its controlling 51 per cent stake in IDBI Bank to Life Insurance Corporation of India (LIC). Subsequently, the government and LIC announced plans for the strategic sale of their stake in IDBI Bank. In October 2022, both shareholders had invited EoI (Expression of Interest) from investors for privatising IDBI Bank by selling a total of 60.72 per cent stake. This includes a 30.48 per cent stake of the government and 30.24 per cent of LIC. In January 2023, the DIPAM received multiple EoIs for IDBI Bank.
Paving the way for the sale of IDBI Bank, Sebi in August 2025 has approved the reclassification of Life Insurance Corporation as a public shareholder from promoter of the bank on completion of strategic divestment in the lender. Besides, the government had undertaken the consolidation of public sector banks. In the biggest consolidation exercise in the banking space, the government, in August 2019, had announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017.
Effective April 1, 2020, United Bank of India and Oriental Bank of Commerce were merged with Punjab National Bank; Syndicate Bank was merged with Canara Bank; Allahabad Bank was amalgamated with Indian Bank; and Andhra Bank and Corporation Bank were consolidated with Union Bank of India. In 2019, Dena Bank and Vijaya Bank were merged with Bank of Baroda.
Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the State Bank of India. She emphasised that infrastructure creation is the government's main focus, and capital expenditure has increased fivefold in the last decade.
