India’s banking sector has entered a new phase with non-performing assets (NPAs) falling to their lowest level on record, giving lenders greater confidence to pursue structural reforms. Finance Minister Nirmala Sitharaman said the improvement marks a significant shift from the period when banks were primarily focused on repairing stressed balance sheets and managing financial risks.
Speaking at the opening of PSB Confluence 2026, a two-day gathering focused on the future of public sector banking, Sitharaman said the sector’s stronger financial position is the result of an extensive clean-up exercise. The progress, she noted, has also improved confidence in the banking system and created room for institutions to consider long-term changes without operating under crisis conditions.
The Department of Financial Services has developed research papers around seven priority areas that will be examined during the confluence. The studies incorporate international practices and are intended to turn discussions into practical recommendations that can be applied across the banking sector. One paper focuses on young customers, an increasingly important segment given India’s demographic profile. Nearly 29% of the country’s population falls within the 15-to-29 age bracket, making it important for banks to understand changing needs at different stages of young people’s lives and reflect those trends in their products and strategies.
The broader agenda covers deposit mobilization, services for younger customers, financing the investment cycle, global capability centers, infrastructure supporting agriculture and horticulture value chains, priority sector lending and a fresh approach to the credit card business. Together, these areas are intended to address evolving customer needs while supporting broader economic activity.
The confluence also has a strategic connection with the government’s proposed high-powered committee on banking’s contribution to the Viksit Bharat vision. Recommendations emerging from the discussions are expected to help inform the committee’s assessment of how the sector should evolve.
Sitharaman called for ideas that can move beyond discussion and be translated into measurable action. Bankers, she said, should take ownership of implementing agreed recommendations. The two-day event is ultimately aimed at identifying reforms that can make India’s banking system more resilient, responsive and capable of supporting the nation’s long-term development ambitions. With banks now operating from a healthier base, the focus is shifting toward innovation, broader access to financial services and stronger support for investment. The emphasis on implementation also signals an effort to ensure that reform proposals produce benefits for businesses, households, farmers and emerging sectors across the economy.
