India Needs ‘Eight to 10’ Large Banks to Fuel Growth, Says Axis Bank CEO

India’s banking system is at a crossroads. As the economy grows and financial needs deepen, industry leaders are calling for a restructure of the banking landscape to better support investment, credit, and inclusive development. In remarks made before the World Economic Forum, Amitabh Chaudhry, CEO of Axis Bank, argued that India needs “at least eight to 10 large banks” capable of serving the full range of financial products and supporting the country’s economic ambitions.  

Why Eight to 10 Large Banks?

India currently operates with a mix of state-owned and private banking institutions. There are 12 state-run banks and 21 large and mid-sized private banks, but only a handful have the scale and universal reach to fully support the breadth of financial services needed for rapid economic growth. 

Chaudhry’s point is straightforward: smaller banks may continue to serve niche segments, but those seeking to play across lending, deposits, corporate finance, trade services, and international banking require deeper balance sheets, diversified funding, and broader networks. A larger set of mega-banks can facilitate infrastructure lending, SME financing, and foreign investment flows more efficiently than a fragmented set of mid-sized players. ( 

Banking consolidation isn’t just a rhetorical call. Policymakers have already begun moves in that direction, including the amalgamation of regional rural banks into larger entities — a process aimed at streamlining credit delivery and strengthening institutional capacity.  

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Current Banking Structure and Its Limits

Despite an overall robust performance by India’s financial sector, concentration remains high at the top. Data suggest that a small group of banks dominate credit and deposit markets, leaving many mid-tier lenders with limited market share. For example, the top few banks now control a significant portion of banking assets, while many others lag behind in influence and capacity.  

Only State Bank of India (SBI) and HDFC Bank currently make it into global top-100 lists by total assets — a reflection of the fact that most Indian banks still lack scale relative to major international peers.  

Smaller banks, even successful ones, often focus on specific customer segments rather than full spectrum offerings. That division limits their ability to mobilise large pools of capital for long-term projects such as infrastructure and industrial expansion, sectors that will shape India’s next decade of growth.

Funding Pressures and Competitive Forces

The competition for deposits and loans is intensifying. As interest rates adjust domestically, deposit growth remains under pressure, and banks are increasingly contesting for both assets and liabilities. Chaudhry expects it may take 18–24 months for deposit growth momentum to rebound significantly, underscoring the importance of resilient funding strategies among larger institutions. 

International players are also deepening their presence, with Japanese and other overseas lenders showing stronger interest in the Indian market. This makes scale even more important: larger banks are better positioned to partner with global capital, safeguard liquidity, and underwrite complex financial products.

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The Road Ahead: Consolidation or Expansion?

Consolidation seems likely to continue as the industry evolves. Larger banks can absorb some smaller ones or lead mergers that strengthen market balance and broaden service capabilities. Meanwhile, non-bank financial companies (NBFCs) and fintech players will continue to innovate in niche areas, often collaborating with larger banks to extend services to underserved segments.  

The government and regulator are aware of these shifts. Proposals around relaxing foreign investment restrictions in state-run banks and reviewing licensing frameworks are on the table, all geared toward creating institutions that can compete on a regional and global scale.  

Conclusion

India stands at a pivotal moment for its banking sector. To support ambitious economic targets — including infrastructure build-out, manufacturing expansion, and inclusive credit access — the country will benefit from a banking landscape with multiple large, well-capitalised banks. Beyond scale, these institutions must be resilient, technologically advanced, and able to meet the needs of a rapidly digitising economy.

If India successfully adapts its banking structure to support these broader national goals, the financial system will be better positioned not just for domestic performance but also for enhanced global integration in the years ahead.