India needs four to five “SBI size” banks to meet the growing needs of the economy and industry, finance minister Nirmala Sitharaman said on Sunday. Addressing the 74th annual general meeting of the Indian Banks’ Association (IBA), she said the industry needs to imagine how Indian banking has to be in the immediate and long-term future.

As far as the long-term future is concerned, she said it is going to be largely driven by digitised processes and there is a need for seamless and interconnected digital systems for a sustainable future for the Indian banking industry.

“Although I did say that in the amalgamation process, your systems have spoken to each other, there wasn’t a problem of those amalgamating banks. And, I remember the banking secretary at that time, Rajiv Kumar, telling me that we have ensured that the amalgamating banks do have their systems in such a way that they can align with each other,” she said.

Mega consolidation was announced in 2019 when Kumar was the financial services secretary but was implemented by his successor Debasish Panda effective April 2020.

As part of the mega consolidation exercise, Oriental Bank of Commerce and United Bank of India were merged with Punjab National Bank; Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank with Indian Bank. There are now seven large public sector banks and five smaller ones.

Appreciating the efforts of bankers to carry out a smooth consolidation exercise during the challenging time of the pandemic, the finance minister said it did not cause inconvenience to the customer and there was no aberration.