Is India Ready for Global-Scale Banks? FM Sitharaman Thinks So

India’s vision for a world-class banking system is taking shape faster than expected. The government is in active talks with the Reserve Bank of India (RBI) to expand the size and strength of Indian banks that can compete globally.

Ever stood in line at a small-town branch where one officer handles everything? That’s what Finance Minister Nirmala Sitharaman wants to change. On 6 November 2025, she said India needs “a lot of big, world-class banks” that can stand beside global names.

As per the Ministry of Finance report (2025), 12 public sector banks (PSBs) now manage around ₹175 trillion in assets, almost 56 percent of India’s banking sector. That’s big, but not big enough for a country aiming to become a $5 trillion economy. Feels like the next step is already overdue.

What Is India’s Plan for Global-Scale Banking?

The Finance Minister Sitharaman on expanding Indian banks has been steady with her message: banks must grow in scale, tech, and reach. She mentioned that talks with the Reserve Bank of India are on, about mergers and governance upgrades.

A Reuters report (October 2025) said the government is studying a plan to lift the foreign investment cap in PSBs to 49 percent. It could draw global investors while keeping Indian control intact.

Most deposits and credit still sit with the public sector banks. Private and small banks have grown but remain limited outside metros.
 

This table, based on the RBI Annual Report 2025, shows where the weight lies. Maybe balance is what India needs next.

Why The Push For Large, Globally Competitive Banks

A LoansJagat report (October 2025) said credit growth could reach 12 percent in FY26, up from 10.1 percent in FY25. The same report estimated about ₹5 lakh crore of new corporate loan demand under the RBI’s M&A funding rule issued last year. Big banks can handle such numbers. Smaller ones often cannot.
 

Numbers like these show the need for globally competitive banks in India is not just talk. It’s a necessity.

What’s Next for India’s Banking Vision?

Back in 2020, 27 banks were merged into 12. A Reuters review titled India’s PSU Bank Merger Plan: What Worked and What Didn’t found mixed results, profits improved, but tech integration lagged.

Now, focus is shifting again. This time it’s about Indian banking reforms for global expansion, not just survival. The talk is less about cleaning balance sheets, more about building banks that can move Indian capital abroad someday.

Conclusion 

Government and RBI officials have taken turns being cautious and bold. Some years were all about cleaning NPAs; now it’s about building capacity. The Department of Financial Services has told PSBs to improve governance, digital systems, and risk controls.

Few economists warn of “too big to fail” risks. But policymakers believe the mix of scale and accountability can be managed. Maybe they’re right. The coming months will tell if India’s banking vision can turn from statement to structure.
 

Apply for Loans Fast and Hassle-Free

Apply Now

About the Author

LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.