The coronavirus pandemic has only accelerated India’s need to have 4-5 more SBI sized banks, Finance Minister Nirmala Sitharaman indicated on Sunday.

The government had earlier thought of having large-sized banks in order to meet the growing needs of the economy and industry but now there is more reason to do so, the minister emphasized. 

Addressing the 74th Annual General Meeting of the Indian Banks' Association (IBA), Sitharaman said India needs a lot more banks and a lot of global size banks. 

"India needs at least 4-5 more SBI sized banks. So, one of the driving forces was for the amalgamation that we need to scale up banking,” she said.

The amalgamation exercise among public sector banks has helped create large banks. 

"We need to scale up banking to meet the new changing and growing requirements but that was thought of even before the pandemic. Now, all the more reason why we would need four or five more SBIs in this country," she said.

As part of the government’s consolidation drive, Oriental Bank of Commerce and United Bank of India were amalgamated into Punjab National Bank; Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.

Earlier, State Bank of India (SBI) carried out the amalgamation exercise with five of its associate banks while Vijaya Bank and Dena Bank were merged with Bank of Baroda.

Following the consolidation, there are now seven large public sector banks and five smaller ones. There were as many as 27 public sector banks (PSBs) in 2017.

Sitharaman also said that the long-term future of banking is going to be largely driven by digitised processes. There is a need for seamless and interconnected digital systems for a sustainable future for the Indian banking industry, she added.

Sitharaman asked the IBA to conduct a digitised mapping of each district of the country with regard to presence of bank branch operation and their location. This, she said, would help to plug areas of gaps with no banking presence effectively.

"Not necessary to have physical banking presence everywhere. The country's optic fibre network has covered two-third of about 7.5 lakh panchayats. This could be used to deliver banking services in unconnected areas as well," she added.

Sitharaman asked banks to develop models and better understanding of businesses focused on exports as India has set a $2 trillion export target by 2030.

Paying homage to bankers who lost their lives in the line of duty during the pandemic, the finance minister urged IBA to help and support the families of the deceased.