2026 can bring big changes for the Indian banking sector. The government is preparing to accelerate the mega merger of public sector banks, which is linked to the goal of Developed India 2047. The objective is to create a strong, large and globally competitive bank. Indications from the Finance Minister and RBI suggest that the third phase of banking consolidation may begin soon. In the first two phases, the number of government banks has reduced from 27 to 12. Also, the process of privatization of IDBI Bank is fast, which is targeted to be completed by March 2026. PSBs’ performance is at record levels and profits may cross ₹2 lakh crore. The system is being strengthened by foreign investment in private banks and 100% FDI in the insurance sector.
Big bang in Banking Sector in 2026. New merger plan of Government Banks. Money Live | A major shake-up in the banking sector in 2026 Government banks’ new merger plan
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