How strong state-owned banks drive growth

The PSBs are expected to focus on infrastructure financing, credit growth, financial inclusion, and digital transactions

A week after Finance Minister Nirmala Sitharaman announced a slew of measures to revive the economy, the government’s decision to merge 10 public sector banks (PSBs) to create four large banks will create big next-generation banks that are imperative for a $5 trillion economy. With this the total number of PSBs will come down to 12, from 27 earlier. These big banks will have enhanced capacity to increase credit, a strong national presence as well as global reach, and this can help reduce the cost of lending through operational efficiency.

Further, the government also plans an upfront capital infusion in PSBs