Finance Minister Nirmala Sitharaman has urged public sector banks (PSBs) to move beyond their traditional “government bank” image and make their services more appealing to Gen Z and young Indians. She called for simpler, personalised and round-the-clock banking services aimed at customers aged 16 and above.

Speaking at the concluding session of the two-day PSB Confluence 2026 on Tuesday, Sitharaman said public sector lenders should engage young customers from the beginning of their financial journeys. She also called for greater financial education and stronger engagement with youth across campuses and educational institutions.

Banks Asked To Offer Youth-Focused Benefits

Sitharaman suggested that PSBs collaborate with reputed educational platforms and institutions to provide young customers with free online learning content. She said opportunities for learning and skill development could help banks connect with young people while bringing more of them into the formal banking system.

She also proposed lifestyle-related benefits, including coupons and vouchers for fitness centres, yoga centres and credible mental wellness platforms. Such offerings, she suggested, could make banking services more relevant to the interests and everyday needs of young customers.

Sitharaman further called for dedicated youth-focused spaces at bank branches. These could include facilities such as “Yuva Kiosks” or “Yuva Banking Mitra”, where a designated employee could help young customers understand banking products and navigate their financial journeys.

Sitharaman Flags Perception Gap With Private Banks

The Finance Minister highlighted the difference in how young customers perceive public and private sector banks. According to her, PSBs continue to be associated with the image of being “government banks”, while private lenders are often considered more attractive by younger customers.

Recalling a recent interaction with young people, Sitharaman said they had indicated a preference for private banks when opening accounts because they viewed them as “cool”.

“Somewhere, private banks seem to have that picture of being banks, but good enough as well… I need public sector banks not to be not cool,” Sitharaman said.

She asked PSBs to speak directly with young customers and understand what influences their perception of banking services and what could make public sector lenders more appealing.

‘Cool’ Banking Must Retain Prudential Standards

While asking PSBs to adapt to changing expectations, Sitharaman cautioned banks against compromising the discipline associated with responsible banking.

“We should keep pace with expectations of youth,” she said, stressing the need to strike a balance between becoming more appealing to young customers and maintaining prudential banking standards.

Sitharaman said PSBs should aim to become the first and most trusted banking choice for young Indians at different stages of their financial lives, including opening a first account, receiving a first salary, pursuing higher education, starting a business or making a first investment.

Banks Asked To Educate Youth On Credit

Sitharaman also stressed the importance of improving young Indians’ understanding of the formal credit system. She asked PSBs to educate customers about credit scores, different types of bank credit products and government-backed credit schemes.

Greater awareness, she said, could help young people access formal finance when they eventually seek funding for entrepreneurial ventures.

She also called on banks to make young customers aware of the importance of maintaining a healthy credit score and a good credit history as part of responsible borrowing and financial discipline.

‘Banking For Youth’ Campaign Proposed From October 2

Sitharaman asked public sector banks to consider launching a month-long “Banking for Youth” campaign from October 2, 2026, coinciding with Gandhi Jayanti. The initiative could be coordinated through the Department of Financial Services and the Indian Banks’ Association.

The proposed campaign would focus on young people at the beginning of their financial lives and aim to establish long-term relationships rather than limiting engagement to opening a bank account.

Sitharaman urged PSBs to build relationships with young Indians “from campus to career and beyond”. She asked banks to take their outreach directly to colleges, universities, skill-building institutions and other campuses instead of waiting for young people to visit branches.

The proposed outreach could include account-opening drives, financial awareness programmes and direct interactions with students and young customers, with the broader aim of making public sector banking more accessible and relevant to the next generation.

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