In a candid reality check for state-owned financial institutions, Union Finance Minister Nirmala Sitharaman observed that young Indians do not find Public Sector Banks (PSBs) “cool”. She urged lenders to shed their rigid image and realign services with modern Gen Z expectations. She spoke at the concluding session of the two-day PSB Confluence 2026 in New Delhi.
Sitharaman recounted personal interactions with youngsters under 25 who overwhelmingly chose private sector banks over state-run alternatives. When asked about their preference, the youngsters admitted that public sector banks simply lacked an appealing, modern identity.
Shedding the Staid Image Without Compromising Banking Prudence
Addressing top executives across the country’s 12 public sector lenders, the Finance Minister emphasized that state-run banks must proactively ask young customers what features make an institution attractive.
She noted that young Indians raised in the smartphone era expect financial services to be instant. They also expect them to be intuitive, and available around the clock.
However, Sitharaman cautioned that her advice was not a call to trivialize financial operations. She reminded bankers that managing public money remains a serious business requiring strict prudential standards.
The objective, she clarified, is to strike a healthy balance between maintaining institutional trust and adopting a vibrant, accessible interface for digital-first depositors.
Comprehensive Roadmap for the “Banking for Youth” Drive
To bridge the gap with the younger demographic, the Finance Minister called on public sector banks to launch a nationwide, month-long “Banking for Youth” campaign starting October 2, 2026.
Coordinated alongside the Department of Financial Services and the Indian Banks’ Association, the initiative will target individuals above 16 years of age.
Rather than waiting for students to walk into traditional branches, banks were directed to engage youth directly across university campuses, vocational centers, and skill-building institutes.
Physical bank branches will also set up dedicated “Yuva Kiosks” or deploy Yuva Banking Mitras. These will assist young individuals with digital onboarding, credit score awareness, and startup loan queries.
Lifetime Engagement Through Value-Added Services
Sitharaman encouraged state lenders to think beyond basic savings accounts. Instead, she suggested they focus on establishing lifelong relationships as young citizens transition into higher education, entrepreneurship, and employment.
She suggested that state-run banks collaborate with educational platforms to provide free skill-building courses. Alongside this, they should offer lifestyle perks like fitness vouchers and mental wellness platform discounts.
Data presented at PSB Confluence 2026 revealed that 18-to-25-year-olds accounted for 66 percent of UPI transactions in mid-2026. This underlines the immense strategic importance of securing Gen Z loyalty early.
Curated news reports, in-depth analysis, and special features by India’s Opinion editorial team.
