The Need for World-Class PSBs
India aims for Two PSBs on world top 20 list by 2047” (ET, 13 Sept), strengthening the banking system is paramount. Banks remain the strongest support system and backbone of the economy, mobilising resources and channelising them to meet domestic as well as international challenges—whether they arise from geopolitical uncertainties, currency and tariff fluctuations, or the disruptive sweep of artificial intelligence across economic activity.
Indian banks have travelled a long way, performing creditably in promoting financial inclusion, strengthening balance sheets by reducing NPAs, and empowering borrowers to become globally competitive in line with the Prime Minister’s call for Atmanirbhar Bharat.
It is now time for the system to introspect and revamp its structure, role, and performance to match the fast-changing global landscape. With the rupee gaining international recognition, digital transactions surging, and digital currencies erasing physical boundaries, Indian PSBs must think big. A possible three-tier banking model could be:
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Banks catering to national and international requirements on a large scale.
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Banks focused on domestic manufacturing and services.
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Banks dedicated to agriculture, SMEs, and retail needs.
Since deposit mobilisation depends on customer service, inflation, cost of living, liquidity, safety, and returns, a specialised set of banks exclusively for household savings—including gold—can be envisaged. This could be supported by a stronger deposit guarantee scheme. Banks mobilising deposits can be a major source of finance to those who specialise in the deployment of funds. With this approach, the deposit mobilisation and customer service to depositors can have a game change in the economy ensuring optimum level of resources mobilisation of all kinds from households and others.
Alongside two giant world-class PSBs for the global stage, such restructuring would ensure specialisation in mobilisation of resources and effective deployment of funds—helping India achieve its 2047 goal.
T V G Krishnan
( personal Views )
