Budget 2026 expectation: Centre mulls roadmap for PSBs under Viksit Bharat 2047 vision

The Centre is likely to unveil a comprehensive transformation roadmap for public sector banks (PSBs) in the Budget 2026‑27, aligning with its Viksit Bharat 2047 vision. The roadmap will focus on structural reforms, technology adoption, and global competitiveness.Sources familiar with the developments told ET that the framework will outline broad contours for institutional strategy, modernising banking infrastructure, and building globally competitive banks capable of leveraging digital technology and new business models to scale performance. The strategy, likely to be highlighted in the FY27 Budget speech on Sunday, is aimed at positioning PSBs to break into the top 20 global banks, a key government objective under the Viksit Bharat framework.A senior official, speaking on condition of anonymity, said the plan would outline the intent “for a transformation roadmap for PSBs to break into the top 20 global banks, with a focus on best practices, including operational efficiency and corporate governance.”The government has already made it clear that it wants at least two Indian state‑owned banks among the world’s top 20 by 2047, dovetailing with the broader development goals of Viksit Bharat 2047.Financial Services Secretary M. Nagaraju has previously noted that PSBs have moved beyond mere survival and stability and are now positioned to play a larger role as “champions of growth, innovation and leadership” in India’s growth journey.In addition to global benchmarking, the transformation plan is likely to prioritise strengthening asset quality, enhancing risk management systems and implementing a robust resolution framework. Building an inclusive, modern workforce is also expected to figure prominently.The move follows discussions at PSB Manthan, a two‑day banking conclave held in December 2025, where stakeholders set forth immediate priorities and a long‑term pathway for PSBs to evolve into world‑class institutions, sources said.PSBs reported a combined net profit of Rs 93,675 crore in the first half of the current fiscal, with gross non‑performing assets falling to a multi‑year low of 2.30%, underlining improvements in balance‑sheet health.In a November 2025 review meeting, the government urged PSBs to further strengthen risk management, underwriting and operational resilience to sustain profitability in a dynamic economic environment. Banks were also asked to ramp up credit to key growth sectors such as renewable energy, green infrastructure, food processing, tourism and data centres, and to adopt sustainable financing practices, including preparedness for an expected credit loss (ECL) provisioning framework.