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Modi's top-5 bank goal puts PSB deposit, youth push in focus
PSBs meet this week to tackle deposit lag and youth banking after Modi's call for a top-5 global bank. Profit hit a record 1.98T rupees, but deposit growth trails credit.
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India's public-sector banks will gather this week for a two-day strategy session that the government hopes will turn stronger balance sheets into a broader customer base, two people familiar with the plans said.
The Department of Financial Services will host PSB Confluence 2026 on Aug. 17-18 in New Delhi, bringing together about 125 senior leaders from state-run lenders and financial institutions. Finance Minister Nirmala Sitharaman is scheduled to address the gathering.
The first day opens with deposit mobilization, followed by banking for youth, before moving on to supporting the investment cycle and global capability centres, the first person said.
Prime Minister Narendra Modi, in his Independence Day address, said India's banking sector was flourishing and called for at least one Indian bank to rank among the world's top five. That goal gives the meeting added weight.
The focus on deposits and young customers comes at a turning point for the PSB sector. In the fiscal year ended March 2026, state-run banks reported their highest-ever combined net profit of 1.98 trillion rupees ($23.7 billion). Gross non-performing assets fell to about 1.9%. Aggregate business crossed 283 trillion rupees, with deposits at 156.3 trillion rupees and advances at 127 trillion rupees. Capital adequacy strengthened to 16.6%.
Credit growth has broadened beyond traditional segments. Retail advances grew 19.8% in FY26. Lending to micro, small and medium enterprises rose 19.6%, agriculture and allied activities 16.2%, while infrastructure lending grew 4.9%.
"The next challenge is about converting that balance-sheet strength into sustainable growth," the first person said. Deposit mobilization is the funding base for further credit expansion, while banking for youth is about establishing long-term relationships with a generation that is increasingly digital-first and financially active, they added.
Banks are expected to examine how products, digital journeys and credit pathways can be made more relevant to younger customers, from first salary accounts and education finance to savings, investments, entrepreneurship and responsible access to credit, the second person said.