Finance Minister Nirmala Sitharaman says the banking sector has moved beyond crisis management, with lenders now better placed to drive the next phase of reforms
India’s banking sector has emerged from a challenging clean-up phase in a significantly stronger position, with non-performing assets (NPAs) now at their lowest-ever level, Finance Minister Nirmala Sitharaman said on Monday.
Addressing the inaugural session of PSB Confluence 2026, Sitharaman said the sharp decline in NPAs had strengthened the credibility of public sector banks and put them in a position to pursue reforms from a position of strength rather than remain focused on crisis management.
The two-day conclave brings together senior leadership from public sector banks to discuss the future of India’s banking sector and identify actionable reforms.
Sitharaman said the Department of Financial Services (DFS) had prepared detailed research papers for all seven themes selected for discussion at the conclave. The papers draw on global best practices and are aimed at generating practical ideas that can be implemented by banks.
Focus shifts from cleanup to growth
The finance minister said the improvement in asset quality provides Indian banks with an opportunity to focus on the next phase of growth and reform.
She linked the conclave to the government’s expected announcement of a high-powered committee on banking for Viksit Bharat, saying the discussions at the event could provide substantive inputs for the committee as it frames recommendations on the future role of the banking sector.
Youth, deposits and investment cycles are among key themes
More from BusinessSitharaman also highlighted the importance of India’s young population for the future of banking. She noted that nearly 29 per cent of Indians are aged between 15 and 29, making youth an important demographic for banks to factor into their business and financial planning.
The seven themes being discussed at the conclave include deposit mobilisation, banking for youth, supporting the investment cycle, global capability centres, agriculture and horticulture value-chain infrastructure, priority sector lending, and reimagining the credit card business.
The government’s focus on banking reforms comes at a time when improving asset quality has given public sector lenders greater room to expand credit, support investment and prepare for the next phase of economic growth.
