FM Nirmala Sitharaman meets bankers: Banking for Gen Z, deposit mobilisation in focus

“Intensive discussions today and tomorrow come at a time when we expect the announcement of the high-powered committee to look into banking for Viksit Bharat. The recommendations [after this discussion] would help us to clearly understand where the committee wants India to go towards Viksit Bharat and in that the role of banks,” Sitharaman said.

The finance minister further said, “it is your output that I am keenly looking forward to because once the committee gives its input, it’s for us to rapidly move in that direction, understanding that the Viksit Bharat 2047 is actually not too far away. We are in 2026, so less than or short of 20 years is what we have before us”.

‘Deposit mobilisation, banking for youth’

The meeting was structured around seven themes covering key areas of opportunity for PSBs and PFIs, including ‘deposit mobilisation’, ‘banking for youth’, ‘supporting the investment cycle’, ‘global capability centres’, agriculture and horticulture value chain infrastructure, priority sector lending and ‘re-imagining credit card business’.

A banking sector executive who participated in the meeting told The Indian Express that several ideas were discussed, particularly on how to mobilise deposits and “finance the aspirations of the youth”. “There have been discussions on new structured products which give more flexibility and better returns. For instance, when we talk about mobilisation of deposits, we are looking at what type of credit flows are required to achieve the kind of GDP needed for Viksit Bharat,” the executive quoted above said.

“It won’t be easy to attract deposits… but if you look at how the average Indian is earning and how more and more people are getting added to the workforce, each of them has some part of their savings in deposits as it is the safest asset. So, the growing base of income earners would be beneficial,” the executive said.

Another banker said the meeting was very focused on addressing the needs of the youth at every level, starting from education to various levels, particularly in the age group of 15-29 years.

Average outstanding debt per borrower rose to Rs 4.78 lakh as of March-end 2025, from Rs 3.41 lakh as of March-end 2018, according to Ministry of Finance data. (EXPRESS PHOTO BY PRAVEEN KHANNA)

Household debt rises, non-housing loans cross 58%

The discussion comes as India’s household debt has surged in recent years, and financial sector regulators are particularly concerned about the composition of that debt. Non-housing retail loans — largely used for consumption — now account for more than half of household borrowings, and have grown faster than housing, agriculture and business loans, a trend flagged in internal discussions among policymakers, as this newspaper had reported earlier.

As of March 2026, non-housing retail loans — primarily the consumption segment — constituted 58.4% of households’ total borrowings, up from 54.9% of total household debt in March 2025. Average outstanding debt per borrower rose to Rs 4.78 lakh as of March-end 2025, from Rs 3.41 lakh as of March-end 2018, according to Ministry of Finance data.

Unsecured personal loans remain a particular vulnerability: In the small-ticket personal loan segment of less than Rs 50,000, fintech firms have gained a higher 56.8% market share, after strong 41.6% credit expansion, well above the overall segment growth of 20.1%. Delinquencies stood at 6.4% as of March 2026. About 70.5% of fintech loan books are unsecured, with roughly half of these loans extended to borrowers under 35.

The two-day PSB Confluence 2026 saw officials from the Department of Financial Services, the Ministry of Finance, leadership of public sector banks, public financial institutions and senior government officials and domain experts.

An official statement said the discussions highlighted approaches to strengthen the deposit base through deeper customer engagement; develop banking propositions responsive to the aspirations and financial needs of India’s youth; enhance institutional capabilities and financing solutions to support the evolving investment cycle; and position banks and financial institutions to capture emerging opportunities across the expanding GCC (global capability centres) ecosystem.