Consolidation in public sector banks is predicted to realize momentum within the coming yr, as the federal government has expressed its need to have extra large, world-class banks within the nation to gasoline the following section of development for Viksit Bharat by 2047.
Final month, Finance Minister Nirmala Sitharaman mentioned India wants many large, world-class banks, and work on this regard has already commenced.
The federal government has initiated discussions with the Reserve Financial institution and public sector banks, she had mentioned, dropping sufficient hints about consolidation within the public sector area.
At present, there are 12 public sector banks, and solely the nation’s greatest lender, State Financial institution of India (SBI), is among the many world prime 50 by property. SBI is ranked forty third globally by property, adopted by private-sector HDFC Financial institution at 73rd.
In a bid to create bigger banks, the federal government beforehand carried out two rounds of consolidation. Within the greatest consolidation train within the banking area, the federal government introduced 4 main mergers of public sector banks in August 2019, bringing the entire quantity all the way down to 12 from 27 in 2017.
Efficient April 1, 2020, United Financial institution of India and Oriental Financial institution of Commerce have been merged with Punjab Nationwide Financial institution; Syndicate Financial institution was merged with Canara Financial institution; Allahabad Financial institution was amalgamated with Indian Financial institution; and Andhra Financial institution and Company Financial institution have been consolidated with Union Financial institution of India.
In 2019, Dena Financial institution and Vijaya Financial institution have been merged with Financial institution of Baroda. Previous to this, the federal government had merged 5 affiliate banks of SBI and Bharatiya Mahila Financial institution with the State Financial institution of India. This was performed in April 2017 with the intent to make SBI a lot larger.
As regards the State Financial institution of India, the financial institution’s board in 2016 submitted a proposal to the federal government to merge its 5 subsidiaries, together with the primary women-oriented lender, Bhartiya Mahila Financial institution, with itself.
The merged entity, efficient April 1, 2017, expanded SBI’s asset base to ₹44 lakh crore, with 22,500 branches and 58,000 ATMs.
SBI first merged the State Financial institution of Saurashtra with itself in 2008. Two years later, the State Financial institution of Indore was merged.
Moreover, the federal government has initiated the privatisation of IDBI Financial institution, and Division of Funding and Public Asset Administration (DIPAM) Secretary Arunish Chawla had expressed hope that the strategic sale can be concluded by March 2026.
As a part of the privatisation train, the federal government in January 2019 bought its controlling 51 per cent stake in IDBI Financial institution to Life Insurance coverage Company of India (LIC).
As regards the profitability of public sector banks, 12 banks, which account for round 60 per cent of the market share in complete enterprise, collectively reported a web revenue of ₹93,675 crore through the first half of 2025–26. That is 10 per cent increased than ₹85,520 crore within the April-September interval of FY25.
Going by the pattern, the online revenue of public sector banks is predicted to cross the landmark ₹2 lakh crore mark on the finish of FY26.
The earlier monetary yr closed with PSU banks posting a file revenue of ₹1.78 lakh crore, up from ₹1.41 lakh crore in FY24, a 26 per cent development.
Alternatively, the non-public sector banking area witnessed a big influx of international capital.
For instance, Japan’s Sumitomo Mitsui Banking Company (SMBC) in Could determined to accumulate a 20 per cent stake in Sure Financial institution for ₹13,483 crore. The deal was concluded in September, with the stake transferred to the Japanese agency.
In October, Emirates NBD Financial institution, the second-largest within the UAE, determined to accumulate a 60 per cent majority stake in RBL Financial institution for ₹26,853 crore.
“India’s monetary establishments stay structurally enticing to international buyers, pushed by constructive structural traits and a supportive regulatory setting. We count on mortgage development to stay at 11-12 per cent, with retail loans increasing the quickest,” S&P International Scores Related Director Deepali Seth Chhabria mentioned.
So far as the insurance coverage sector is worried, the yr noticed the passage of the landmark Sabka Bima Sabki Raksha (Modification of Insurance coverage Legal guidelines) Invoice, 2025, from Parliament, paving the best way for 100 per cent FDI within the sector.
“In all probability probably the most defining growth of this yr was the choice to open the sector to 100 per cent international direct funding. It is a significant step that may usher in contemporary capital, world experience, and new concepts whereas attracting extra international gamers and inducing wholesome competitors,” Generali Central Life Insurance coverage MD and CEO Alok Rungta mentioned.
Moreover, the GST charge minimize, efficient September 22, made premiums for particular person insurance policies extra reasonably priced, because the 18 per cent charge was eliminated fully.
The final insurance coverage sector witnessed a spat between hospitals and well being insurers over the cashless remedy.
“The removing of GST improved affordability and entry, whereas continued development on platforms such because the Nationwide Well being Claims Trade and Bima Sugam helped scale back friction from buy, servicing, and claims. Collectively, these developments strengthened confidence within the system and supported broader adoption,” Aditya Birla Well being Insurance coverage, MD & CEO Mayank Bathwal mentioned.
In the course of the yr, there was a web influx of international capital into the trade. Kotak Mahindra Normal Insurance coverage, a promoter of Kotak Mahindra Financial institution, in February determined to promote its 70 per cent stake within the insurance coverage agency for a complete consideration of roughly ₹5,560 crore.
So far as the outflow of international capital is worried, one main announcement on this regard was Allianz Germany’s exit from Bajaj Finserv.
Bajaj Finserv proposed to accumulate Allianz SE’s 26 per cent stake within the erstwhile Bajaj Allianz Normal Insurance coverage Firm and Bajaj Allianz Life Insurance coverage Firm for ₹24,180 crore.
Printed on December 26, 2025
