RENEWED STRENGTH

With cleaned-up balance sheets and renewed investor interest, India's banks are entering a new phase of consolidation and expansion to power the country's growth ambitions

- 

With cleaned-up balance sheets and renewed investor interest, India's banks are entering a new phase of consolidation and expansion to power the country's growth ambitions

India’s banking industry is in the spotlight. Foreign investors are taking renewed interest, pumping over US $5 billion into select private banks in recent months. On the public-sector front, the government has signalled a major reset-hinting at another round of consolidation, raising foreign ownership limits in state-owned banks, and even inviting private-sector talent to take up top posts in PSBs.

These moves mark the early stages of the next reform wave in the sector. The reform agenda signals a clear belief that the banking sector's scale and stability are central to sustaining India’s growth trajectory.

Large domestic banks would play a vital role in financing the country’s growing ambitions in infrastructure, manufacturing and technology. Between 2017 and 2020, ten public sector banks were merged into four large banks, reducing the number of PSBs from 27 to 12.

Now, the number of PSBs is expected to go even lower. But are PSBs ready for it? The answer: a definite yes.

Over the past decade, the banking industry has undergone a remarkable turnaround. Balance sheets have been cleaned up, capital positions strengthened, and asset quality restored. The transformation has been especially impressive in state-owned banks, which once required heavy capital infusion to survive.

STRONGER THAN EVER: 2018 VS. 2025

In the last 10 years, bank credit and deposits have nearly tripled - deposits now stand at ₹225.8 trillion and credit at ₹182.43 trillion. Capital adequacy has improved sharply, rising from 13.5% in fiscal years (FY) 2015 to 17.5% in FY25.