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<h1>India's banking sector needs world-class banks; government discussing consolidation, privatisation and measures to deepen credit.</h1> The government is engaging with the Reserve Bank and lenders to create larger, world-class banks and has urged banks to deepen and widen credit flows to industry, linking demand from GST rate cuts to investment. It highlights ongoing structural measures: privatisation and strategic sale of IDBI Bank with Sebi-approved reclassification of its insurer from promoter to public shareholder, and the consolidation of public sector banks through multiple mergers to strengthen the banking system.