PSB Manthan'25 Reimagines Indian Banking, Here're The Key Takeaways

India’s public sector banking system is preparing for its next big leap. At the Finance Ministry’s flagship two-day event, PSB Manthan 2025, policymakers, economists, and bankers came together to rethink the future of Public Sector Banks (PSBs).

The conversation this year marks a clear break from the past. Instead of relying on bank mergers and consolidation, which dominated the last decade of reforms, the focus has shifted towards artificial intelligence (AI), governance, customer-first strategies, and global expansion.

The government’s ambition is bold: to see at least two Indian PSBs enter the global top 20 banks in the coming years. At present, only the State Bank of India (SBI) makes it to the world’s top 50, at the 47th rank by assets.

But can India’s public sector banks — often criticized for bureaucracy and inefficiency — really transform themselves into globally competitive institutions?

From Consolidation to Modernization

Over the last decade, India witnessed several high-profile PSB mergers.

• In 2019, Bank of Baroda absorbed Dena Bank and Vijaya Bank.

• In 2020, Punjab National Bank merged with Oriental Bank of Commerce and United Bank of India.

• Canara Bank merged with Syndicate Bank, while Union Bank of India took over Andhra Bank and Corporation Bank.

These moves reduced the number of PSBs and created larger entities, but they did not significantly alter India’s global banking position.

Now, government sources have made it clear: no new mergers are planned. The road ahead will be defined by modernization, not consolidation.

AI as Capital, Not Cost

A striking feature of PSB Manthan 2025 was the debate on whether investments in Artificial Intelligence should be treated as capital expenditure (capex) or operational costs (opex).

This framing itself signals a transformation. AI is no longer an optional tool — it is being positioned as a core investment in the future of banking.

In a fireside chat, Ashish Lahoti (CTO, Servicenow) and Rohit Verma (Principal Architect, Google Cloud) described how AI will power the banks of tomorrow. From predictive credit scoring to real-time fraud detection, from personalized financial advice to back-end automation — AI is set to redefine every layer of banking operations.

If Indian PSBs implement this effectively, they could overcome decades of perception as slow, bureaucratic, and paper-heavy institutions, transforming instead into fast, responsive, and data-driven organizations.

Customers at the Core: Technology Meets Human Touch

India’s public sector banks account for over 60% of the banking market and serve millions of customers across rural and semi-urban India.

At Manthan 2025, speakers emphasized that while AI and digitization are vital, human touch cannot be lost.

For farmers seeking credit, MSMEs looking for working capital, or rural households opening their first accounts, trust and accessibility matter as much as digital efficiency.

The new playbook, therefore, is about creating customer-friendly PSBs that combine AI-driven efficiency with personalized, human-centered service.

Governance: Autonomy vs. Accountability

Governance reforms emerged as another priority. For decades, PSBs have been caught between government oversight and management autonomy, often leading to risk aversion and slow innovation.

At the conference, experts called for restructuring board composition to strengthen corporate governance while ensuring greater professional independence.

As RBI Deputy Governor Swaminathan J. put it, “Operational excellence and governance reforms are critical enablers for global competitiveness.”

The challenge will be to create PSBs that are professionally managed like private banks, yet remain accountable to the public.

Expanding Credit: Agriculture and MSMEs in Focus

PSB Manthan also spotlighted the need to expand credit flow to priority sectors such as agriculture and micro, small, and medium enterprises (MSMEs).

These sectors form the backbone of India’s inclusive growth. More accessible credit to farmers and small businesses could significantly boost economic resilience, especially amid global uncertainties.

Global Footprints in a Geopolitical World

In today’s multipolar world, India’s PSBs were urged to look beyond domestic markets. Expanding into new geographies, strengthening trade finance, and supporting Indian companies abroad are part of the roadmap.

This global expansion is not just about growth, but also about resilience — ensuring Indian banks are not overexposed to domestic risks and can play a role in global trade flows.

Aligning with Viksit Bharat 2047

The larger narrative ties into the national vision of Viksit Bharat 2047 — India’s goal of becoming a developed economy by its centenary of independence.

On Day Two, former RBI Deputy Governor R. Gandhi will deliver an expert session on building a future-ready workforce, followed by panels on inclusivity and scaling PSBs to global standards.

The message is clear: PSBs must not only survive but thrive as key pillars of India’s development journey.

The conversations at PSB Manthan 2025 underscore an inflection point:

• Mergers are off the table. Future reforms will rely on technology, governance, and strategy.

• AI is central. The debate is no longer “if” but “how fast” PSBs can adopt it.

• Customers come first. A mix of digital and human touch is essential.

• Governance reforms are urgent. Professional autonomy must coexist with public accountability.

• Global ambition is real. From SBI to other PSBs, the target is top 20 global rankings.

Whether India can achieve this vision will depend on how quickly PSBs shed old habits and embrace the next-gen reforms charted at Manthan 2025.

FAQs on PSB Manthan 2025

What is PSB Manthan 2025?
PSB Manthan 2025 is a two-day conference organized by the Finance Ministry to chart the future of India’s public sector banks, with a focus on AI adoption, governance reforms, customer service, and global competitiveness.

Which Indian PSB is ranked globally?
Currently, only the State Bank of India (SBI) is ranked among the top 50 global banks, at the 47th position by assets.

Are more bank mergers planned in India?
No. Government sources clarified that bank consolidation is not on the agenda at PSB Manthan 2025. The focus is now on modernization and AI-driven growth.

How will AI impact Indian banks?
AI will drive predictive lending, fraud detection, and personalized banking, making PSBs faster, more efficient, and globally competitive.

What is the link between PSBs and Viksit Bharat 2047?
PSBs are expected to serve as central pillars of India’s journey to becoming a developed nation by 2047, ensuring both financial inclusion and global competitiveness.