Vince Cable has warned banks it is "disingenuous in the extreme" to suggest reforms to the sector will damage Britain’s economic recovery.
The business secretary’s intervention came after CBI head John Cridland claimed it would be “barking” to implement the Independent Commission on Banking’s (ICB) reforms now.
Angela Knight of the British Bankers’ Association had also called for the reforms to be delayed saying “the UK's efforts must be focused on the economic recovery”.
On Wednesday morning Cridland maintained businesses and banks still want to delay the reforms, adding there was "a real question mark still" over Sir John Vickers’ ICB proposals.
"What has happened since Vickers produced his interim report before the summer is that we have had a radical slowdown in the world economy and we are going to have a major problem if growth stagnates and at that point my businesses being able to get cash from their banks is critical and anything which makes it harder for the banks to keep the wheels of the economy well oiled is not good timing", he told BBC Radio 4's Today Programme.
But in an interview with the Times Cable said banks were trying to create “panic”.
"It is disingenuous in the extreme to use the current context to argue against reform.
"Banks are in a way trying to create a panic around something which they know has got to happen.
"The governor of the Bank of England and many other people have been arguing that we have to deal with the too-big-to-fail problem.
"We can't have big global banks with balance sheets bigger than British GDP underwritten by the taxpayer; this can't go on and it has got to be dealt with."
Cable added the current concerns over the Eurozone and poor growth were an impetus for reform and "all the more reason for grappling with this issue".
In its interim plans, made public in April, Sir John Vickers recommended the banks should ring-fence their investment arms from retail banking.
The ICB’s final report is due out in two weeks on September 12.