Lenders eye top table

India’s state-owned banks have been set a stiff task: To see that at least two or three of them make it to the ranks of the world’s top 20 lenders. Here's how they can get there

- HARSH KUMAR

At a two-day Manthan event of public sector banks (PSBs) last month the government set an ambitious target for the senior bankers gathered for the first such summit hosted by the Department of Financial Services (DFS) since April 2022: Get at least two-to-three state-owned Indian banks placed in the world’s top-20 by 2047.

DFS secretary M Nagaraju said PSBs have moved beyond survival and stability and are now positioned to play a larger role as champions of growth, innovation and leadership in India’s march towards Viksit Bharat, or developed nation status.

India has 12 PSBs, which together accounted for 59.5 per cent of the total banking assets in India including public, private, and foreign banks in 2024. Interest income for public banks reached ₹11.1 trillion ($128.1 billion), while private banks earned ₹8,3 trillion ($95.7 billion) during the year.

State Bank of India (SBI) and HDFC Bank — the largest public and private sector lenders by market cap — are the only Indian banks in the latest S&P Global Market Intelligence ranking of the world’s 100 largest banks by assets. SBI climbed four places to 43rd, while HDFC Bank rose one place to 73rd in this year’s ranking. Chinese lenders dominated the list, occupying the top four positions, reflecting their influence in mergers and acquisitions.

Merger lessons In the biggest consolidation in Indian banking, the government in August 2019 announced four major mergers of PSBs, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders more efficient and competitive.

Bankers who witnessed the process recall that smaller banks often lost their regional customer-base, yet the consolidation also created a new generation of banking leaders. Of the 12 current PSB managing directors, four come from merged entities. Both UCO Bank's Ashwani Kumar and Punjab & Sind Bank's Swarup Kumar Saha, for instance, are from Oriental Bank of Commerce (OBC).