In a strategic push to strengthen India’s banking sector, the government is nudging large Non-Banking Financial Companies (NBFCs) to convert into banks. The move comes as part of India’s long-term development roadmap — Viksit Bharat 2047 — which envisions a stronger and more globally competitive financial system.
India needs bigger banks to become a bigger economy,” said a senior government official, highlighting the need for transformation in financial intermediation.
Why NBFCs?
According to the official, NBFCs and Small Finance Banks (SFBs) are seen as the two most viable channels to expand the number of full-scale banks in the country. With the rising demand for credit and financial services, these institutions are being encouraged to seek banking licences and help bridge the financial gap.
“NBFCs should aspire to become banks,” the official said, pointing out that the country’s banking infrastructure needs to scale up significantly to meet future goals.
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The Bigger Goal: Global-Scale Indian Banks
Beyond domestic needs, the move is tied to India’s global ambitions. The government’s Viksit Bharat 2047 plan includes a clear target — to see at least two Indian banks among the world’s top 10 by asset size.
“We can’t be a big country without big banks,” the official stated firmly, underlining the urgency of building institutions that can stand shoulder-to-shoulder with global banking giants.
Banking System Needs to Scale Up
The idea is not just to increase the number of banks, but also to build robust, large-scale financial institutions that are capable of handling the diverse and growing needs of India’s economy. With NBFCs already serving a large customer base, transitioning them into banks could be a logical step to ensure deeper financial penetration with regulatory oversight.
“Whether we agree or not, India needs more banks — and these are the only viable paths,” the official added.
Key Highlights:
- Govt urging large NBFCs to apply for banking licences
- NBFCs and SFBs identified as key channels for banking expansion
- Part of the Viksit Bharat 2047 mission to modernise Indian banking
- Vision to see 2 Indian banks in the world’s top 10 by asset size by 2047
- Focus on creating systematically large banks to meet growing demand
This development signals a potential shift in India’s financial sector, where large NBFCs may soon operate under full banking regulations, giving them access to broader capital, while also increasing systemic accountability.
The goal is clear — more banks, bigger banks, and globally recognised Indian financial institutions by 2047.
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