Finance Minister Nirmala Sitharaman on Monday asked public sector banks (PSBs) to leverage their strengthened balance sheets to support the next phase of economic growth and prepare for banking reforms aimed at building a financial system aligned with the government’s Viksit Bharat 2047 vision.
Addressing a two-day conclave of heads of public sector banks and financial institutions in New Delhi, Sitharaman said the banking sector was entering the next phase from a position of strength, with non-performing assets (NPAs) at their lowest levels.
“Your NPAs are at the lowest ever Indian banking has seen, and therefore there cannot be a better position of strength with which you can take on reforms,” she said.
Her comments come ahead of the expected announcement of a high-powered committee to examine banking for Viksit Bharat. She said the ideas emerging from the banking leadership could provide substantive inputs to the committee and help the government move rapidly on its recommendations.
“Viksit Bharat 2047 is actually not too far away. We are in 2026, so less than 20 years is what we have before us,” Sitharaman said, underlining the urgency for the banking sector to prepare for the country’s future financing requirements.
Department of Financial Services Secretary Sanjay Lohiya said the asset quality of PSBs had improved sharply, with gross NPAs declining from a peak of 14.6% in March 2018 to a record low of 1.93% in March 2026. Net NPAs fell from 8% to 2.39% during the same period.
The improvement has strengthened PSB balance sheets and enhanced their capacity to support growth, Lohiya said.
However, he said banks would need to sharpen their competitiveness as technology reshapes business models, customer expectations evolve and new areas of economic activity emerge.
“The next imperative is to sustain this momentum and leverage the financial strength achieved for quality business growth,” Lohiya said.
Sitharaman stressed the need for banks to focus particularly on the country’s young population, noting that 29% of Indians are in the 15-29 age group. Banks need to expand access to financial services for young people, including education loans, entrepreneurship finance and investment products, she said.
She also called for the banking sector to generate practical and implementable ideas to meet emerging financing needs, saying the sector should be ready to “press the button or pedal to rev up the Indian economy” once the banking committee gives its recommendations.
Lohiya identified deposit mobilisation as a key priority as household savings preferences change. Banks would need to strengthen their deposit base through better service, convenience, product innovation and sustained customer relationships.
He also highlighted opportunities in financing global capability centres, agriculture and horticulture value chains, and priority-sector lending. Banks should move beyond conventional farm credit to finance storage, cold chains, processing, logistics, packaging and marketing linkages.
On credit cards, Lohiya said PSBs needed to build stronger propositions as customer behaviour, technology and competition changed, while maintaining responsible underwriting and risk controls.
Sitharaman said the banking sector, having emerged from the asset-quality crisis, now had to use its improved financial position to support the next phase of India's growth and development.