Public sector banks are accelerating their entry into wealth management, traditionally dominated by private lenders, by leveraging their large customer base, digital capabilities and expanded advisory services. According to reports from The Economic Times, this strategic move is aimed at improving customer engagement as household savings shift from bank deposits to market-linked instruments and risk products. The initiative represents a fundamental shift in how PSBs approach their service offerings beyond traditional banking products, with formal wealth management verticals expected to strengthen customer stickiness, improve CASA quality and enable a shift toward fee-based income, reducing reliance on interest income.
Indian Bank is establishing a dedicated wealth management vertical targeting high net worth individuals, as reported by The Economic Times. Managing director Binod Kumar explained the rationale behind this strategic move, stating that India's household savings are increasingly moving away from deposits toward market-linked and insurance products. He emphasized that the fastest-growing share of customer wallets is moving outside the bank's current core offerings, making a strong wealth proposition essential to remain relevant in the evolving market landscape. The bank currently has a tie-up with Fisdom but is now looking to build a broader platform offering personalised services to HNIs.
State Bank of India, the sectoral leader, has set an ambitious target to grow its wealth assets under management fivefold to ₹15 lakh crore by 2030, according to reports from The Economic Times. This substantial growth objective reflects the bank's commitment to expanding its wealth management capabilities and capturing a larger share of the growing market for high-value financial services.
Bank deposits have steadily lost share in household financial savings, declining to 35% in FY25 from more than 58% in FY12, after falling to a low of 31.9% in FY22, according to the Economic Survey 2025-26. The share of equity and mutual funds in annual household financial savings increased to over 15.2% in FY25 from 2% in FY12. This fundamental shift in household savings patterns is driving PSBs' strategic pivot toward wealth management services, as private banks currently dominate this space with specialized services for high net worth individuals including personalised banking, lending and investment solutions.
The wealth management market in India is projected to double to $2.3 trillion by FY29 from $1.1 trillion in FY24, as reported by The Economic Times. Additionally, the country's HNI population is projected to double to 1.7 million by 2027. These projections highlight the significant growth potential that PSBs are positioning themselves to capture through their enhanced wealth management capabilities and strategic market positioning.
Bank of Baroda and Uco Bank currently offer investment services to customers across income levels through partnerships with fintech firm Fisdo, giving customers access to mutual funds, systematic investment plans and tax-saving products. This demonstrates the existing framework that PSBs can leverage to expand their wealth management capabilities, with Fisdo providing the technological infrastructure for mutual fund and SIP services. The partnership model allows PSBs to quickly enter the wealth management space while maintaining their core banking operations. Indian Overseas Bank is also evaluating entry into the segment, according to managing director Ajay Kumar Srivastava, who stated that this is under active consideration.
