India's $30 Trillion Dream Could Reshape Global Banking--Here's What's Coming

Indian regulators are quietly weighing big changes to the country's banking playbookchanges that could reshape how India funds its $30 trillion growth ambition by 2047. According to sources close to the talks, the Finance Ministry and Reserve Bank of India are exploring whether to let large companies apply for banking licenses again (with strict limits on control), encourage non-bank lenders to become full-service banks, and relax foreign ownership rules in state-run banks. These discussions are still at a very early stage, and no timeline has been set. But if implemented, they could mark one of the most significant shifts in India's tightly controlled financial system in a decade.

Why now? Because India's growth goals won't be met without more creditand bigger banks. Bank lending currently makes up just 56% of GDP. To hit Modi's $30 trillion GDP target by 2047, that figure needs to climb to around 130%. That means scaling up India's banking capacity, especially in manufacturing-heavy regions like southern India, where contract factories for Apple AAPL and other global giants are setting up shop. Right now, only two Indian lendersState Bank of India and HDFC Bankrank among the world's top 100 banks by assets. By comparison, China and the U.S. dominate the top 10. India hasn't issued a new full banking license in nearly a decade, and conglomerates have been barred from owning banks since 2016.

But investor interest is already building. In May, Sumitomo Mitsui's banking unit agreed to take a 20% stake in Yes Bank for $1.58 billionthe biggest foreign investment in India's banking sector to date. The Nifty PSU Bank Index, which tracks public-sector banks, reversed losses and rose 0.5% following news of the potential reforms. While there's no guarantee these proposals move forward, the signal is clear: India knows it can't grow into a $30 trillion economy on yesterday's banking model. And if these ideas become policy, they could unlock a wave of long-term capital and trigger a reshaping of the financial landscape that investors will want to watch closely.