Indian Banks Enter Reform Phase as Nirmala Sitharaman Highlights Record-Low NPAs

New Delhi, August 17, 2026; Union Finance Minister Nirmala Sitharaman said Indian banks are entering a stronger phase of growth and reform, with non-performing assets (NPAs) declining to their lowest level ever recorded in the country’s banking sector.

Speaking at the opening of PSB Confluence 2026, a two-day gathering of public sector bank leadership, Sitharaman said the improvement in asset quality has strengthened the financial position of lenders and created greater scope for undertaking structural reforms.

The Finance Minister said the latest conclave has been designed to move beyond general discussions and focus on practical measures that can be implemented by banks. The Department of Financial Services has prepared seven research papers covering the key areas selected for deliberation, with the documents circulated among participants ahead of the meeting.

Sitharaman placed particular emphasis on India‘s young population and the opportunities it presents for the banking industry. She noted that people aged between 15 and 29 constitute nearly 29 per cent of the country’s population, making youth an important segment for future financial products, services and planning.

The minister said the research-based approach at the conclave would help bank executives develop ideas that can be translated into concrete initiatives. She also indicated that the discussions could contribute to the government’s broader roadmap for the banking sector.

The event comes ahead of the proposed formation of a high-level committee on banking for Viksit Bharat. Sitharaman said the recommendations and ideas emerging from the PSB Confluence could provide useful inputs for the committee as it examines the future direction of India’s banking system.

The seven areas being examined at the conclave include strengthening deposit mobilisation, expanding banking services for young people, facilitating the investment cycle, supporting global capability centres, improving agriculture and horticulture value-chain infrastructure, strengthening priority-sector lending and developing new approaches to the credit-card business.

Sitharaman’s remarks underline the government’s focus on using the improved health of public sector banks as a foundation for the next phase of financial-sector transformation and economic growth.