Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs | Photo credit: @nsitharamanoffc X/ANI photo
On the occasion of the 12th SBI Banking and Economics Conclave 2025, Sitharaman asked lenders to deepen and widen the flow of credit to the sector, exuding confidence that demand driven by the GST rate cut would unleash a positive investment cycle.
Stressing that India needs many large, world-class banks, she said that “the government is looking at this and the work has already started. We are in discussions with the RBI. We are in discussions with the banks”.
Privatization and reforms
As part of the privatization, the government sold its controlling 51 percent stake in IDBI Bank to Life Insurance Corporation of India (LIC) in January 2019.
Subsequently, the government and LIC announced plans for strategic sale of their stake in IDBI Bank.
In October 2022, both shareholders had invited EoI (Expression of Interest) from investors for the privatization of IDBI Bank by selling a total of 60.72 percent stake. This includes 30.48 percent stake by the government and 30.24 percent by LIC.
In January 2023, DIPAM received multiple EoIs for IDBI Bank.
To pave the way for the sale of IDBI Bank, SEBI in August 2025 approved the reclassification of Life Insurance Corporation as public shareholder from promoter of the bank after completing strategic disinvestment in the lender.
Bank mergers and economies of scale
Moreover, the government had taken up the consolidation of public sector banks. In the biggest consolidation exercise in the banking industry, the government had announced four major mergers of public sector banks in August 2019, taking the total number to twelve from 27 in 2017.
With effect from April 1, 2020, United Bank of India and Oriental Bank of Commerce have been merged into Punjab National Bank; Syndicate Bank was merged with Canara Bank; Allahabad Bank was merged with Indian Bank; and Andhra Bank and Corporation Bank were consolidated with Union Bank of India.
In 2019, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Previously, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the State Bank of India.
She emphasized that infrastructure creation is the government’s main focus, and capital expenditure has increased fivefold in the past decade.
Published on November 6, 2025
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