Bigger Banks and a Deeper Bond Market: What Shaktikanta Das Proposed for Indian Finance
Shaktikanta Das urged bigger Indian banks and a deeper corporate bond market. See the five priorities and the banking health numbers he cited.
India needs bigger banks and a deeper corporate bond market, according to Shaktikanta Das, Principal Secretary-2 to the Prime Minister. In a keynote at Business Standard's BFSI Insight Summit in Mumbai on 27 October 2026, he laid out five priorities for the financial sector and cited a set of banking-health numbers. He spoke as a senior official, but the proposals he outlined are not announced policy; treat them as signals of direction.
The big idea: larger institutions
Das said India needs financial institutions that can compete globally, which points to further consolidation among public sector banks. He described the mergers of the past decade as an important foundation. He noted Prime Minister Narendra Modi's goal of an Indian bank among the world's top five, and that the FY27 Budget announced a high-level committee on banking for Viksit Bharat. No merger plan was named in the material we reviewed.
The five priorities
1. Larger financial institutions.
2. A deeper corporate bond market.
3. Stronger municipal bonds.
4. Wider insurance coverage.
5. Wider pension coverage.
Why the bond market matters
A corporate bond is a loan from investors to a company, traded in the market. Das cited the market at about 15-16% of GDP, with outstanding issuances of about Rs 53.6 trillion in 2024-25, dominated by private placements and highly rated borrowers. Private placements are sales to a small group of investors rather than the public. A deeper market would give companies an alternative to bank loans, which could ease pressure on banks and NBFCs. Pension funds, which he said hold about Rs 35 trillion across NPS and EPFO, are a potential source of long-term demand.
The health numbers he cited
- Gross NPA ratio of scheduled commercial banks: 1.8% in March, a multi-decade low; net NPA 0.4%.
- Capital to risk-weighted assets: 17.7%; common equity Tier-I: 15.3% (end-March 2026).
- NBFCs, including housing finance companies, account for about 14% of commercial sector credit, growing at 16.6%.
- GDP growth: 7.8% in Q1 FY27, and the IMF raised its FY27 projection to 7% from 6.4%.
- Bank credit to industry grew about 20% year on year in July.
- Household liabilities: 45.9% of GDP at end-March, with financial net worth above 90% of GDP.
He also noted that in July 2020 the RBI had warned gross NPAs could reach 14.7% by March 2021 under severe stress, against an actual 7.3%.
Other proposals
Das suggested expanding credit in tier-II, tier-III and rural areas, using alternative data such as GST records and account aggregation for algorithm-based underwriting, and fully rolling out the RBI's Unified Lending Interface. He also backed green finance, including sovereign green bonds and digital carbon markets, and regulatory sandboxes to balance innovation and oversight.
The caveat
Bank health is strong on the numbers cited, but other speakers at the same event, including SBI's chairman and Fitch, pointed to rate, funding and household-leverage risks. A strong balance sheet does not remove the need to watch them.
Key takeaways
- Das called for larger banks, pointing to more public sector bank consolidation, and a deeper corporate bond market now at about 15-16% of GDP.
- He cited gross NPAs of 1.8%, a capital ratio of 17.7% and GDP growth of 7.8% in Q1 FY27.
- These are proposals, not policy; no specific mergers were announced.
Sources
- [Business Standard: Shaktikanta Das pitches for bigger banks, deeper corporate bond market](https://www.business-standard.com/amp/specials/bs-events/shaktikanta-das-pitches-for-bigger-banks-deeper-corporate-bond-market-1261027013741.html)
Tags: bank consolidation corporate bond market Shaktikanta Das Indian banking financial policy