Finance Minister Nirmala Sitharaman has clarified that the government currently has no roadmap for bank consolidation in India, providing important guidance on the future direction of the country's banking sector.

Government's Position on Bank Consolidation

The Finance Minister's statement removes uncertainty regarding potential consolidation plans in the banking industry. This clarification comes at a time when the banking sector continues to evolve and stakeholders seek direction on structural changes.

Action on Banking Mis-selling Issues

In a separate but significant development, Sitharaman announced that issues related to mis-selling by banks will be addressed at the next Financial Stability and Development Council (FSDC) meeting. This indicates the government's commitment to addressing customer protection concerns and ensuring fair banking practices.

The FSDC, which serves as the apex body for financial stability and development, will provide an appropriate forum to discuss and formulate strategies to tackle mis-selling practices across the banking sector.

Implications for Banking Sector

These announcements provide important clarity for banking sector stakeholders, including investors, customers, and financial institutions. The absence of a consolidation roadmap suggests that banks can continue their current operational strategies without immediate concerns about structural changes, while the focus on mis-selling issues demonstrates regulatory attention to customer protection and market conduct.

Finance Minister Nirmala Sitharaman held discussions with a farmers delegation led by BJP MP D Purandeswari ahead of Budget 2026-27 to address concerns over increased taxation affecting tobacco cultivation. The Finance Ministry highlighted the meeting in a tweet, stating that the "Delegation led by Smt @PurandeswariBJP, Honble MP LS, calls on Smt @nsitharaman."

Key Concerns Raised by Farmers

The delegation expressed significant concerns about the potential impact of increased taxation on flue-cured Virginia (FCV) tobacco cultivation. Purandeswari warned that higher taxes could cause distress for numerous farming families and disrupt the regulated marketing system. The Andhra Pradesh, Telangana & Karnataka FCV Tobacco Farmers Federation issued a statement highlighting these concerns.

Impact on Legal Trade and Revenue

The farmers delegation cautioned that significant tax hikes might reduce legal trade while boosting illicit activities, potentially leading to revenue losses for the government. They emphasized that starting February 1, there would be a notable rise in tax on legal cigarettes, which could affect demand and trade dynamics.

Farmers from Andhra Pradesh and Telangana specifically informed Sitharaman that their crops were ready for auction next month. They expressed fears that increased taxes might lower domestic consumption, leading to price drops and unsold stock.

Market Stability Concerns

The delegation highlighted several potential negative impacts on market stability:

• Pressure on auction processes
• Reduced buyer participation
• Decreased overall trade confidence
• Adverse effects on farmer livelihoods

The farmers stressed the need for careful consideration of these factors to avoid negative impacts on their income and the rural economies dependent on tobacco cultivation. The meeting underscored the importance of balancing taxation policies with the economic realities faced by tobacco farmers to ensure a stable market environment.