Govt borrowing challenge passed on to RBI

Finance Minister Nirmala Sitharaman’s “futuristic” Budget proposes a high-level banking committee for “Viksit Bharat”.

- TAMAL BANDYOPADHYAY

It will review a sector with strong balance sheets, improved asset quality and presence in over 98 per cent of India’s villages, and recommend how to support the next phase of growth while safeguarding financial stability, inclusion and consumer protection.

In the financial sector, the stated theme is consumer protection. Both the finance ministry and the Reserve Bank of India (RBI) have been sensitising the sector.

Beyond this, the committee will probably chart a second round of consolidation in public-sector banking (PSB).

In 2017, State Bank of India (SBI) merged five associate banks and Bharatiya Mahila Bank into itself. By 2020, mergers among PSBs cut their number from 27 to 12. Most PSBs gained scale through this. A further round could create even larger PSBs and reduce the count again; SBI remains the only Indian bank among the world’s top 50 by assets.