With improving customer service a key objective, the Indian government invited participants from the private sector at its third brainstorming session for public sector banks (PSBs) that began on Friday. The two-day meeting, termed ‘PSB Manthan’ and organised by the finance ministry’s Department of Financial Services, was attended by senior management of all state-owned banks, Reserve Bank of India (RBI) Deputy Governor Swaminathan J, former central bank deputy governors, and officials from private tech companies including Google, Microsoft, and ServiceNow, among others.
“The past two editions of the PSB Manthan were done at a time when these banks were going through a difficult phase in terms of asset quality. This time around, the discussions and churning of ideas are happening when their profitability and business growth has improved. Given this and keeping in mind the Viksit Bharat target of 2047, the attempt is to look at the next phase of sustainable growth and customer centricity,” a government official said, requesting anonymity.
In addition to the officials from the finance ministry, including Department of Financial Services Secretary M Nagaraju and Chief Economic Advisor V Anantha Nageswaran, the RBI, and PSBs, “eminent speakers across various sectors related to banking” were also present at the meeting. Those from the private sector included Pooja Jain Gupta, Managing Director of stationery manufacturer Luxor Writing Instruments, Sonali Kulkarni, Country Head – BFSI at Microsoft India & South Asia, and Arvind Sahay, Director of Management Development Institute, Gurgaon.
“We thought that for this PSB Manthan, people from the private sector should also be called, particularly to get their perspective on how to improve the customer centricity of PSBs. Therefore, private sector bankers and industrialists were invited to get their expectations from public sector banks,” the source added.
One of the sessions at the meet included an open house conducted by State Bank of India (SBI) Chairman CS Setty, which saw a discussion and ideas being floated on customer service and handling of public grievances. The first panel discussion of the day was on ‘Envisioning customer experience of the future: Embedding a culture of customer centricity and service excellence in PSBs’.
Breaking into top-20
The government also wants PSBs to become “globally competitive” and is hoping at least 1-2 of them rank in the top-20 of the world by 2047, the source added. “Chinese, US, German, Singapore banks are all there. But what about us? So that was also one of the key points that was discussed, which is how we are going to place ourselves keeping in mind the current geopolitical situation.”
“Right now, SBI is 43rd in the world in terms of asset size. It is the only PSB in the top 100,” another official said.
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Talk of increasing the size of state-owned banks has been on for a long time, with consolidation among them seen as a key route. The last round of bank mergers in the public sector space was announced in 2019, which saw 10 PSBs being amalgamated into four, taking the total number of PSBs to 12. However, the first government official said there was no discussion on consolidation of PSBs at the meeting on Friday.
“We have to think of new sectors, find new markets which have not been tapped so far. For that, banks are naturally one of the partners,” the official said. On Friday, the topics of some of the relevant sessions for the same included ‘Transforming Indian banks for global leadership’ and ‘Technology and AI-powered banks of the future’. On Saturday, a panel discussion will be held on ‘Building globally competitive and scaled PSBs for Viksit Bharat 2047’, among others.
Agri, MSME focus
The PSB Manthan is also taking place a day after RBI Governor Sanjay Malhotra met exporters, who are under heavy strain due to the 50 per cent tariff imposed by the US on Indian goods. On Thursday, exporters asked the central bank for easier loan repayment terms and interest subvention on new loans, among other requests. The RBI is expected to meet banks next to consider ways to offer support.
According to the government source, the PSB Manthan on Friday did not see any discussion on concerns of exporters and Micro, Small, and Medium Enterprises (MSMEs) due to the US’ tariffs. However, there was talk of boosting credit growth to agriculture and MSMEs.
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As per latest RBI data, banks’ non-food loans were up 9.9 per cent year-on-year as on July 25, down from 13.6 per cent a year ago. The decline in credit growth to agriculture and allied activities was even sharper at 7.3 per cent from 18.1 per cent. On the other hand, micro and small industries were taking loans from banks at a faster clip. As on July 25, bank loans to these companies were up 21 per cent year-on-year, compared to a growth of 13.3 per cent a year ago. Loans to medium-sized firms were 14.7 per cent higher, lower than the 17.2 per cent growth exhibited at the end of July 2024.
On the deposit side, the government official noted that PSBs “have to increase” their current account, savings account (CASA) ratio “because PSBs’ CASA situation at present is dwindling. This issue has been discussed”.
