As India marches confidently towards its centenary of independence, the vision of a ‘Developed India’ or ‘Viksit Bharat’ by 2047 is taking centre stage in our national discourse. We speak of cutting-edge infrastructure, global manufacturing hubs, and technological sovereignty. But beneath these grand ambitions lies a critical, and often overlooked, pillar: the need for a financial system of commensurate scale and sophistication. Simply put, India’s journey to 2047 is being hampered by its undersized banks.
Our current banking landscape, while stable, is built for a different era. The State Bank of India, our largest, is a domestic titan but a global middleweight, with assets less than one-fifth of giants like the Industrial and Commercial Bank of China (ICBC). For an economy targeting the $10-trillion mark, this is a severe structural constraint. To power the India of 2047, we need to urgently cultivate a cohort of global-scale banks.
Why Size is a Strategic Imperative
The case for bigger banks is not about vanity; it is about economic necessity.
First, consider the infrastructure deficit. The National Infrastructure Pipeline envisions investments exceeding $1.5 trillion. Financing a single high-speed rail corridor or a network of green hydrogen hubs requires underwriting capacity that stretches the limits of our current banks. Only institutions with massive balance sheets can take on such projects without dangerous risk concentration, and, crucially, syndicate them to international lenders, acting as a bridge for global capital into India.
Second, our corporate champions are going global. Whether it is a Tata company acquiring abroad, a Reliance building global supply chains, or an Infosys servicing the world, they need complex financial services—multi-billion-dollar foreign currency loans, merger advisories, and sophisticated hedging tools. Today, they are often forced to walk into the offices of global banks like Citi or HSBC. This represents a colossal flight of high-margin business, a leakage of fees that should rightly fuel the profits and resilience of our own financial institutions.
Third, there is the geostrategic dimension. Finance is the lifeblood of global influence. China has deftly used its banking behemoths to finance infrastructure across Asia and Africa, weaving a web of economic dependency. If India aspires to be a true “first among equals” in the Global South and a counterbalance in the Indo-Pacific, it needs financial institutions that can facilitate trade, fund friendly governments, and project economic power. Soft power needs hard financial muscle.
The Pathways and The Pitfalls
Thankfully, the blueprint is clear. The government has already taken tentative steps by consolidating public sector banks (PSBs). But this is merely the prelude. We now need a bold, two-pronged strategy.
The first prong is deep consolidation. We must move beyond creating larger PSBs to creating mega-banks. Imagine merging two or three of our largest PSBs to create an entity with assets touching $2 trillion—a true national champion capable of standing shoulder-to-shoulder with global peers. This cannot be a mere accounting exercise; it must be a strategic one, focused on creating synergies and global competitive advantage.
The second prong is unleashing the private sector. The merger of HDFC Ltd. with HDFC Bank was a masterstroke, creating a domestic powerhouse. We need to encourage more of this. The regulatory framework should facilitate, not hinder, the organic and inorganic growth of our most efficient private banks. Perhaps it is time to consider allowing strong private banks to acquire smaller, struggling PSBs, injecting much-needed efficiency and capital.
However, this path is fraught with challenges. Creating “too big to fail” institutions demands a super-strong regulatory framework to prevent catastrophic risk. The mammoth task of integrating legacy technologies and clashing corporate cultures in PSB mergers cannot be overstated. Most critically, we must professionalize the governance of PSBs, insulating them from political interference and allowing them to be run by bankers, not bureaucrats.
The Call to Action
The mission to build banks for 2047 is not a financial technicality; it is a national project. It requires a clear-eyed vision and political consensus. We must treat our banks not as tools for populist doles, but as strategic assets that will fund our nation’s destiny.
The journey to a developed India will be paved with roads, ports, and digital highways. But the cement that will bind this future is capital. It is time we built the vessels—the global-scale Indian banks—capable of carrying it. The clock is ticking.
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