The Indian government is holding a special two-day meeting with public sector banks (PSBs) on September 12 and 13, called “Manthan”. This is the first such meeting in over two years. This is a two‑day high‑level summit hosted by the Department of Financial Services (DFS), part of the Finance Ministry, involving top leadership of India’s public sector banks.
Big names like McKinsey & Company (a global consulting firm) and Swaminathan J., a Deputy Governor of the Reserve Bank of India (RBI), will also be part of the meeting. DFS Secretary M. Nagaraju will chair the meeting. Other stakeholders expected: Reserve Bank of India (RBI), possibly technological partners, service providers, etc., especially on the agenda items dealing with tech, digital, data, cybersecurity.
Along with senior officials from the Ministry of Finance and leadership from Public Sector Banks, the “Manthan” meeting is also expected to see participation from a range of key stakeholders, including: Reserve Bank of India (RBI), possibly technological partners, service providers, etc.
Agenda of “Manthan” Meeting
The goal is to discuss and exchange ideas to improve how government-owned banks work. The formal discussion will revolve around:
-
Future plans/roadmap for PSBs which includes a strategic direction, growth plans, digital transformation, and modernization.
-
Use of artificial intelligence (AI) in banking to improve decision-making, customer service, fraud detection, etc.
-
Better management and governance to improve transparency, board structures, and accountability in PSBs.
-
Improving the quality of loans and assets by managing and reducing non-performing assets (NPAs), ensuring healthy loan books.
-
Customer service and satisfaction by enhancing service quality, financial inclusion, and digital experiences.
Potential topics which are not officially confirmed but likely to be discussed:
- Next round of bank mergers – Although not confirmed, sources say Banks consolidation (PSBs) will likely be discussed. In the past, the government has said it wants to merge PSBs to create 4-5 large, globally competitive banks(down from the current 12 banks). This would help India have stronger banks that can support its development goals like “Viksit Bharat” (a developed India) for 2047.
-
Raising capital – PSBs need more capital to grow and remain competitive. One idea being explored is to raise the FDI (Foreign Direct Investment) cap in PSBs (currently capped at 20% under government approval).
Need of this Meeting (Manthan). Why Now?
-
Public Sector Banks (PSBs) have continued their strong financial performance, collectively posting record profits of ₹1.78 lakh crore in FY25 (financial year ending March 2025). This marks a 26% increase over the previous year’s combined earnings, highlighting the improved efficiency, asset quality, and profitability across all 12 PSBs
-
However, loan growth has started to slow down, especially in some sectors. There are also concerns that banks are not passing on interest rate cuts to borrowers quickly enough, which could affect overall demand and credit flow in the economy.
-
The Indian government has articulated its ambition of a $30‑trillion economy by 2047, “Viksit Bharat 2047”. For that, the banking sector (especially PSBs) needs to scale up, become more efficient, more resilient, digital, globally competitive.
-
Many earlier reforms (like EASE – Enhanced Access & Service Excellence) have been ongoing; this Manthan is an effort to push them further, update them, and align with current challenges.
Possible outcomes to watch for in this meeting
- Announcements of new reforms or policy directives from the Finance Ministry or the government to PSBs (on governance, reporting, digitisation, etc.)
- Technology / digital‑upgradation programs, maybe partnerships with tech firms.
- With the Union Budget approaching, the outcomes of this meeting could influence major policy announcements — especially on bank mergers or FDI changes.
This meeting is a big deal. It could shape the future of government-owned banks in India — possibly leading to mergers, more use of technology, and even policy changes in the upcoming Budget. In short, it’s about making PSBs future-ready in an era of rapid economic and technological change.
Explanation of Financial Term Used Here:
Bank consolidation (mergers) – The country needs a strong and efficient banking system that can support big businesses, infrastructure, and economic growth. Right now, India has many 12 Public Sector Banks (PSBs). But many of these are small or mid-sized, and not competitive compared to big global banks. So to achieve the goals, the government is planning to merge these smaller public banks and create 4-5 large, strong banks. This process is called bank consolidation.