India has set ambitious goals for its financial sector under the Viksit Bharat 2047 plan: to have at least two public sector banks (PSBs) among the world’s top 20 banks in terms of asset size. The strategy, elaborated during the PSB Manthan 2025 event in New Delhi, reflects the government’s vision to develop globally competitive banks that match the country’s growing economic stature.

Current Status of Indian Banks

India’s largest lender, the State Bank of India (SBI), currently ranks 43rd globally in terms of asset size. While it is the strongest candidate for the top 20, the gap in scale compared to global giants remains significant. Other Indian PSBs such as Bank of Baroda and Punjab National Bank lag much further behind.

In contrast, private sector banks like HDFC Bank figure among the top 100 globally—indicating that while India’s banking industry has an international presence, its public sector banks still trail in terms of scale. For PSBs to become global leaders, both asset expansion and operational transformation will be crucial.

Strategic Roadmap

The government is pursuing a multi-pronged approach to achieve this milestone:

1. Focus on Organic Growth

Unlike earlier years, when several PSBs were merged to create stronger institutions, the current vision emphasises organic growth. Expanding balance sheets, improving profitability, and enhancing efficiency will be the key drivers rather than relying solely on consolidation.

2. Technology and AI Adoption

Technology lies at the core of this transformation. Artificial Intelligence (AI) and digital platforms are expected to play a major role in expanding customer services, reducing costs, improving fraud detection, and strengthening risk management. Studies suggest that AI adoption could enhance the efficiency of Indian banking by as much as 40–45%.

3. Governance and Autonomy

The reform plan also stresses the need to enhance governance standards in PSBs. Boards will be given greater autonomy to enable faster decision-making, quicker grievance redressal, and sharper risk oversight. Removing bureaucratic hurdles and outdated procedures is seen as essential for competing with private and global banks.

4. Expanding Global Reach

Strengthening the international footprint of PSBs is another crucial element of the strategy. Indian PSBs are expected to open more branches abroad, finance cross-border trade, and potentially acquire or partner with overseas institutions. Such expansion will help diversify operations and increase asset size.

5. Supporting Underserved Segments

Domestically, PSBs are tasked with expanding credit access to MSMEs, agriculture, and rural sectors, while also strengthening retail lending and deposit mobilisation. This dual push—enhancing domestic inclusion while expanding globally—aims to accelerate asset growth.

Challenges in Reaching the Global Top 20

The journey from the 43rd rank to the top 20 will be challenging.

• Scale Gap: The world’s largest banks, particularly those in China and the U.S., have assets worth several trillions of dollars. Matching such scale will require sustained double-digit growth over decades.
• Risk Management: PSBs have historically struggled with non-performing assets (NPAs). Maintaining asset quality while pursuing aggressive growth will be essential.
• Profitability: While cumulative PSB profitability reached an all-time high of ₹1.78 lakh crore in FY25, sustained profitability is necessary to finance growth and attract global investors.
• Regulatory Compliance: To compete globally, Indian PSBs must comply with rigorous international standards in capital adequacy, cybersecurity, ESG reporting, and anti-money laundering norms.
• Private Bank Competition: Private sector banks in India are faster at adopting technology and delivering superior customer service. PSBs must bridge this gap to emerge as global leaders.

Ways to Succeed

A few strategies can help India’s PSBs join the global elite:

• Strengthening Capital: Adequate equity infusions and access to global capital markets will be critical.
• Diversification: Beyond traditional lending, PSBs can expand into investment banking, wealth management, and insurance.
• International Partnerships: Collaborations or acquisitions of foreign banks can accelerate global expansion.
• Digital Leadership: Establishing world-class digital banking platforms can drive faster, scalable growth.
• Policy Support: Streamlined regulations, reduced bureaucratic delays, and incentives for overseas expansion will create an enabling environment.

FAQs

Q1: Which banks are most likely to reach the top 20?
SBI is the leading contender, given its size and market share. Bank of Baroda or Punjab National Bank could follow, provided they scale up significantly.

Q2: How are global bank rankings determined?
Rankings are primarily based on asset size, though profitability, capital strength, and international presence also play a role.

Q3: Will further mergers be required?
The current policy emphasises organic growth. However, selective mergers in the future cannot be ruled out if they help achieve scale.

Q4: What role does technology play?
AI and digital banking are expected to transform operations, boost efficiency, enhance customer experience, and expand reach at lower costs.

Q5: How will this benefit India?
Globally competitive banks will not only serve India’s expanding economy but also support Indian businesses abroad, strengthen resilience against global shocks, and elevate India’s position in the international financial system.

Conclusion

India’s goal of placing two PSBs among the world’s top 20 banks by 2047 reflects both confidence and ambition. With SBI already in the top 50, closing the gap to the top 20 will require consistent progress in technology adoption, global expansion, and governance reforms.

Challenges related to asset quality, profitability, and competition persist, but the foundation is being laid through continuous reform and modernisation. If implemented effectively, this initiative will not only produce financially robust Indian banks but also reinforce India’s position as a rising financial power—aligned with its broader economic vision for a Viksit Bharat.