Finance Minister Nirmala Sitharaman used the 12th SBI Banking & Economics Conclave in Mumbai to press for building many “big, world‑class banks,” deepen credit to productive sectors, sustain fiscal prudence, and operationalize a pragmatic, inclusive roadmap toward Atmanirbhar Bharat without shutting the door on market innovation such as F&O trading.
World‑class banks push
- The Finance Minister said India “needs big and world‑class banks,” adding that discussions are underway with the RBI and lenders to build scale, capability and global competitiveness in the banking system.
- She indicated groundwork has begun on creating larger institutions and a conducive ecosystem where more banks can operate and grow, amid expectations of deeper consolidation in PSBs.
Deepen and widen credit
- Banks were urged to “deepen and widen” credit flows to productive sectors to support growth and trigger a virtuous investment cycle, with GST‑related demand cited as a catalyst.
- The Minister pointed to visible signs of rising consumption and private capex intentions, arguing that broad‑based credit expansion can reinforce growth momentum.
Financial inclusion as backbone
- She underscored that banks enabled economic self‑reliance by driving inclusion and credit creation, citing 56 crore Jan Dhan accounts as evidence of the system’s reach.
- The theme tied to targeted delivery and DBT gains in reducing leakages, aligning inclusion with productivity and resilience of household balance sheets.
Atmanirbhar Bharat, not isolation
- Emphasizing Atmanirbhar Bharat as resilient interdependence, the Minister framed self‑reliance around diversified production, value‑chain participation, and sectoral breadth from MSMEs and textiles to technology and advanced manufacturing. She argued a one‑size‑fits‑all model is infeasible for India’s scale, calling for broad‑based progress shaped by domestic realities and aspirations.
Fiscal prudence and macro stability
- Sitharaman reiterated commitment to fiscal discipline, balancing growth spending with stability to preserve investor confidence and contain inflation risks.
- She linked prudent public finance to the durability of India’s growth cycle and the credibility of financial institutions.
Global headwinds, domestic resilience
- The speech flagged slower globalisation, fragile supply chains, climate‑transition costs, and rising volatility in capital flows as persistent headwinds. Despite the external shocks, she noted India’s demonstrated resilience and improving outlook, framing stronger domestic capabilities as the counterweight.
GST as virtuous‑cycle trigger
- The Minister credited GST reforms with improving compliance and kickstarting a “virtuous cycle” of demand and investment, supported by the GST Council’s consensus‑driven approach.
- She highlighted broad citizen participation in the reformed framework, aligning tax buoyancy with public investment and growth.
Market development: F&O stance
- On capital markets, she clarified the government is “not shutting the door on F&O,” focusing instead on removing roadblocks while stressing investor responsibility and financial literacy.
- The approach seeks to balance innovation and protection through awareness and calibrated rule‑making rather than prohibitions.
Human capital and skilling
- Sustained high growth will require continuous upskilling and reskilling to match emerging technologies and global competitiveness, improving labour productivity and job quality.
- She linked bank‑led credit and inclusion to entrepreneurship, MSME scaling, and workforce upgrading as mutually reinforcing levers.
Operational asks for banks
- Public sector banks were urged to ensure branch staff know local languages to deepen customer connect and service quality at the last mile.
- Professionalised decision‑making and robust risk frameworks were cited as essential to support scale, credit quality, and inclusion concurrently.
Key takeaways for the banking sector
- Expect policy support for building scale—through consolidation where efficient—and for an ecosystem that enables more players to grow to world‑class standards.
- Prepare for directives that encourage broader sectoral credit reach, inclusion intensity, and capability investments in people, technology, and risk management.
Why this matters now
- With global value chains in flux and capital‑flow volatility elevated, domestic financial depth and bank scale become strategic to funding India’s capex cycle and insulating growth.
- Aligning fiscal prudence, inclusion, and market development signals continuity of a growth‑with‑stability framework into FY26, with banks at the center of execution.
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