India is encouraging large Non-Banking Financial Companies (NBFCs) to transform into banks as part of its Viksit Bharat 2047 vision. The goal is to strengthen financial intermediation, increase the number of banks, and ensure that Indian banks can compete globally, with at least two expected to rank among the world’s top 10 by 2047.
In a strategic move aligned with its long-term development plan, the Government of India is encouraging large Non-Banking Financial Companies (NBFCs) to apply for banking licenses, aiming to enhance financial intermediation and expand the nation’s banking landscape. A senior official stated this push is vital to meet the ambitious goals outlined in the Viksit Bharat 2047 vision, which includes building global-scale banks capable of competing on the international stage.
According to the source, the country needs “systematically bigger banks,” and NBFCs—alongside Small Finance Banks (SFBs)—represent the most viable avenues to scale up. India currently has only a handful of large banks, and this initiative aims to increase both their size and number to address financial demands, especially in underbanked rural and semi-urban regions.
“NBFCs should aspire to become banks,” the official said, emphasizing that the goal is to have at least two Indian banks among the world’s top 10 by asset size by 2047. This reflects a broader vision where India’s economic might is matched by its financial institutions’ global standing.
Entities such as Bajaj Finance and L&T Finance are examples of large NBFCs that could fit this transformational model due to their size and diversified shareholding.
The government’s dual-track strategy includes both enabling such NBFCs to transition into commercial banks and scaling up the existing major banks. This would help in improving credit flow and enhancing the risk-bearing capacity of financial institutions. NBFCs already play a critical role in last-mile credit delivery and are often the only accessible lenders in remote areas.
Furthermore, the government believes that the current Reserve Bank of India (RBI) guidelines provide enough flexibility for this transition. Corporate entities are currently allowed to hold up to 26% in banking institutions, but structures can be adjusted to maintain effective control within regulatory bounds.
As part of this vision, the government is not only focusing on numbers but also on the systemic capability of these institutions to handle risk, allocate capital effectively, and support long-term economic growth.
“NBFCs are extremely important for our financial system. Banks should learn from them,” the official noted, citing their agility, efficient customer interfaces, and deep rural penetration.
India’s financial sector, under this transformative approach, is poised to become more inclusive, resilient, and globally competitive as it moves toward 2047—a century of independence and a landmark in economic progress.
