Why in News?
- On October 30, 2026, the Central Government constituted a High-Level Committee on Banking for Viksit Bharat to review India's banking sector and recommend structural, institutional, regulatory and legislative reforms to make it globally competitive, financially inclusive and resilient.
- The committee will be chaired by Suresh N. Patel, former Central Vigilance Commissioner, and will submit its recommendations within six months.
- The committee was announced by Finance Minister Nirmala Sitharaman in her Union Budget Speech 2026–27.
About the High-Level Committee on Banking for Viksit Bharat
The committee has been constituted to assess the existing banking framework and identify reforms required to support India's long-term economic growth and the vision of Viksit Bharat.
Composition of the Committee
The committee consists of five members:
- Suresh N. Patel – Former Central Vigilance Commissioner (Chairperson).
- Shirish Chandra Murmu – Deputy Governor, Reserve Bank of India.
- Padmaja Chunduru – Former Managing Director and CEO, Indian Bank.
- N. S. Vishwanathan – Former Deputy Governor, Reserve Bank of India.
- Joint Secretary (Banking) – Department of Financial Services (Member Secretary).
Tenure: Six months.
Seven Key Terms of Reference of the Committee
The committee has been assigned seven major responsibilities:
1. Review of Banking Practices and Prudential Norms
- Assess existing banking practices and prudential norms in India.
- Identify global best practices and adapt them to Indian conditions.
- Develop a roadmap for creating globally competitive Indian banks.
2. Regulatory and Legal Reforms
- Review the existing regulatory and legal framework governing banks.
- Examine the functioning of Regional Rural Banks (RRBs) and Cooperative Banks.
- Recommend reforms to improve operational efficiency and ease of banking.
3. Long-Term Capital Requirements
- Assess the long-term capital requirements of banks.
- Examine the funding needs of Development Financial Institutions (DFIs) and Non-Banking Financial Companies (NBFCs).
- Suggest funding sources and mechanisms to support credit growth.
4. Cost of Capital and Private Investment
- Examine differences in the cost of capital for businesses.
- Recommend policy measures to encourage private investment.
- Promote sustainable and long-term economic growth.
5. Artificial Intelligence and Digital Innovation
- Prepare a roadmap for Artificial Intelligence (AI) and digital innovation in banking institutions.
- Recommend safeguards against cyber risks.
- Suggest strategies for talent acquisition and capacity building to develop a future-ready banking workforce.
6. Priority Sector Lending and Lead Bank Scheme
- Review the effectiveness and relevance of the Priority Sector Lending (PSL) framework.
- Assess the functioning of the Lead Bank Scheme.
- Improve coordination and ensure inclusive, balanced and data-driven credit delivery.
7. Other Recommendations
- Examine any additional banking-related matters referred to the committee by the Government of India.
Significance of the Committee for Viksit Bharat
- Strengthening the Banking System: Structural and institutional reforms can improve the efficiency, stability and competitiveness of Indian banks.
- Supporting Economic Growth: A strong banking system ensures adequate credit availability for industries, infrastructure, agriculture and small businesses.
- Promoting Financial Inclusion: Reforms in Priority Sector Lending and the Lead Bank Scheme can improve access to institutional credit for weaker and underserved sections.
- Encouraging Private Investment: Measures to reduce the cost of capital can encourage private investment, industrial expansion and employment generation.
- Promoting Digital Banking: AI and digital technologies can improve banking efficiency, customer services, fraud detection and financial access.
- Strengthening Cybersecurity: Appropriate safeguards can address emerging threats associated with digital banking, cyber fraud and data breaches.
- Improving Global Competitiveness: Adoption of international best practices can help Indian banks become more efficient and competitive in global financial markets.
Major Challenges Facing India's Banking Sector
Despite significant progress, India's banking sector faces several structural and emerging challenges:
- Cybersecurity Threats: Increasing digital transactions have expanded the risk of cyberattacks, phishing and financial fraud.
- Governance Issues: Weak internal controls, accountability gaps and operational inefficiencies can affect banking performance.
- Credit Access: Small and Medium Enterprises (SMEs), farmers and economically weaker sections often face difficulties accessing affordable institutional credit.
- Capital Requirements: Banks require adequate capital to finance infrastructure, industrial expansion and long-term economic development.
- Technology Gap: Differences in technological capabilities among public sector, private sector, cooperative and regional rural banks affect service delivery.
- Human Resource Challenges: Rapid technological changes require continuous training, specialised skills and institutional capacity building.
- Cost of Credit: High borrowing costs can discourage private investment and affect the competitiveness of Indian businesses.
Way Forward
- Strengthen Banking Governance: Improve transparency, accountability, risk management and institutional autonomy.
- Promote Technology Adoption: Encourage responsible use of AI, digital banking and data analytics.
- Enhance Cybersecurity: Strengthen cyber-risk monitoring, data protection and fraud prevention mechanisms.
- Improve Credit Delivery: Make institutional credit more accessible to MSMEs, farmers, women and vulnerable sections.
- Ensure Adequate Capital: Develop sustainable funding mechanisms for banks, DFIs and NBFCs.
- Build Human Resources: Invest in specialised training and capacity building to prepare banking professionals for emerging technologies.
- Adopt Global Best Practices: Align India's banking framework with international standards while considering domestic economic requirements.
Conclusion
- A strong, inclusive and resilient banking system is essential for achieving the vision of Viksit Bharat.
- The High-Level Committee on Banking for Viksit Bharat provides an opportunity to undertake comprehensive reforms in banking governance, capital mobilisation, digital innovation and financial inclusion.
- Its recommendations can help develop a future-ready banking system capable of supporting India's ambition of becoming a developed economy by 2047.
