India needs 4-5 SBI-size banks to meet growing needs of economy: Sitharaman

India needs at least four or five different State Bank of India (SBI) size banks to meet the growing needs of the economy, said Finance Minister Nirmala Sitharaman. She also urged Indian Banks’ Association (IBA) to develop a digitised district-wise map of bank branches so that locations with no banking presence are identified to ensure that they either have a physical or digital footprint.

“One of the driving forces for the amalgamation (of banks) was that we need to scale up banking to meet the new changing and growing requirements of the economy. But that was thought of even before the pandemic. Now all the more reason why we would need four or five SBIs in the country,” Sitharaman said at the 74th AGM of the Indian Banks’ Association.

SBI is India’s largest bank with total deposits of ₹37.20 lakh crore and gross advances of ₹25.23 lakh crore as at June-end 2021.

“Amalgamation is a very important exercise because the way in which the economy is shifting to a different plane altogether, the way in which the economy, together with the industry, is also looking at various ways of adapting to a post-pandemic era, there are ever so many challenges. And, in fact, even before the pandemic, one of the driving forces for the amalgamation was that India needs a lot more banks, a lot more big banks,” she said.

Financial inclusion

On the need to expand banking to achieve financial inclusion, Sitharaman said, “Even today, there are very many districts in which even big panchayats don’t have a physical bank. I am not saying that everywhere you need to have physical, brick-and-mortar banks. Digitisation has saved a lot of cost for you even without compromising on the service you provide. But even then there are such parts of this country which cannot but have at least one brick and mortar [bank],” Sitharaman said.

The minister observed that almost two-thirds of the panchayats have already been given optical fibre connections under the government’s optical fibre connectivity programme.

However, there are heavy economic activity dominant areas in which not even one bank prevails. The minister asked the bankers to closely look at the centres of economic activities, even if they are completely in rural areas.