India needs more banks to meet the financial needs of its people, said the leaders of the two largest lenders as they spoke about the future of their industry in a webinar organised by Business Standard.

Rajnish Kumar, chairman of public sector State Bank of India (SBI), and Aditya Puri, the outgoing leader of privately owned HDFC Bank, said governance of a lender matters more than its size.

"Consolidation does help in one aspect of managing large credit and project financing. For financial inclusion, you need many banks," said Kumar.

“Consolidation for the sake of consolidation" is not feasible because demand for financial services exceeds supply in the country, said Puri.

Puri said India’s banks are safe and "dire predictions" about their finances due to the impact of the coronavirus pandemic had "not come true". There has been "some uptick" in banks non-performing assets but the problem was "not disastrous".