Published: 31 October 2026 | Reading time: 8–10 minutes
India’s banking system is being asked to do two things at once: support a larger and more complex economy, while remaining stable, inclusive and resilient. On 30 October 2026, the Ministry of Finance announced the constitution of the High Level Committee on Banking for Viksit Bharat. The committee has a six-month tenure and has been tasked with recommending structural, institutional, regulatory and legislative reforms for the banking sector.
What happened?
The Government of India formally constituted the committee to review banking practices and recommend reforms aligned with the long-term objective of Viksit Bharat 2047. The announcement follows the commitment made by Finance Minister Nirmala Sitharaman in the Union Budget 2026–27. The committee is not a new regulator and its formation does not, by itself, amend any banking law or RBI direction. Its role is to assess the system and submit recommendations.
Who are the members?
| Person | Role in committee / relevant position |
|---|---|
| Suresh N. Patel | Chairman; former Central Vigilance Commissioner |
| Shirish Chandra Murmu | Member; Deputy Governor, Reserve Bank of India |
| Padmaja Chunduru | Member; former MD & CEO, Indian Bank |
| N. S. Vishwanathan | Member; former Deputy Governor, Reserve Bank of India |
| Joint Secretary (Banking), Department of Financial Services | Member Secretary |
The committee brings together experience in banking, supervision and public-sector finance. The official release names the Joint Secretary (Banking) as Member Secretary but does not identify the individual.
Why was the committee announced?
The Budget 2026–27 announcement called for a comprehensive review as India enters its next phase of growth. Banks must mobilise savings, allocate credit, finance businesses and infrastructure, and remain resilient. The committee’s mandate is therefore wider than bank mergers or branch expansion.
India’s banking architecture includes commercial banks, RRBs, cooperative banks, small finance banks and payments banks. Their ownership, mandates and regulatory frameworks differ. The committee has specifically been asked to review the legal and regulatory frameworks for RRBs and cooperative banks.
Seven areas in the committee’s terms of reference
1. Banking practices, prudential norms and global best practices
The committee will assess current banking practices and prudential norms, identify relevant global best practices and consider how these can be adapted for India. Prudential norms are safeguards intended to preserve the safety and soundness of financial institutions. They include areas such as capital adequacy, asset classification, provisioning, liquidity and risk management. Global standards cannot simply be copied; they must be adapted to India’s financial structure, development needs and supervisory capacity.
2. Regulatory and legal framework, including RRBs and cooperative banks
The committee will review the existing regulatory and legal framework for banks, including Regional Rural Banks and cooperative banks, and suggest reforms to improve efficiency and ease of banking. This is important because India’s financial inclusion goals depend on institutions that can serve customers outside major urban centres. RRBs were created to expand institutional credit in rural areas, while cooperative banks have a distinct member-based and cooperative structure.
3. Long-term capital requirements
The review will assess the long-term capital needs of banks, Development Financial Institutions (DFIs) and Non-Banking Financial Companies (NBFCs). It will consider funding sources and enabling mechanisms to support credit growth. Banks need capital to absorb losses and expand lending; DFIs are designed to provide longer-term finance in sectors such as infrastructure; NBFCs provide credit and specialised financial services but do not operate under exactly the same framework as banks.
4. Cost of capital and private investment
The committee will examine differences in the cost of capital for businesses and suggest policy options to encourage private investment. The cost of capital affects whether companies can finance new factories, equipment, technology and expansion at viable rates. The issue links banking reform with investment, employment, competitiveness and productivity. It should not be reduced to a promise that lending rates will automatically fall; the committee is being asked to study the policy and structural factors behind financing costs.
5. Artificial intelligence, digital innovation and cyber safeguards
The committee will prepare a roadmap for AI and digital innovation in banking institutions while recommending safeguards against cyber risks. Digital channels can improve customer access, fraud monitoring, credit assessment and operational efficiency. They also create exposure to identity theft, data misuse, cyberattacks, model bias, third-party technology risks and service outages. The terms of reference also include talent acquisition and capacity building so that the banking workforce can adapt to new technology.
6. Priority Sector Lending and Lead Bank Scheme
The committee will review the Priority Sector Lending (PSL) framework and the Lead Bank Scheme. PSL directs a prescribed share of bank credit towards specified sectors and borrower groups that are important for inclusive development but may not receive adequate institutional credit under purely commercial allocation. The Lead Bank Scheme coordinates banking development at district level, with a lead bank facilitating coordination among banks, government departments and other stakeholders.
The committee has been asked to assess their relevance, effectiveness and coordination in promoting inclusive, balanced and data-driven credit delivery. This is particularly important for rural credit, micro and small enterprises, agriculture and underserved regions.
7. Other matters referred by the Government
The final term allows the Government to refer additional matters to the committee. This gives the review flexibility, but the official announcement does not specify what additional subjects, if any, will be assigned.
What is the committee’s tenure?
The committee’s tenure is six months. This is the period stated in the Ministry of Finance announcement. The release does not provide a detailed public meeting calendar or a date for submission of the final report. Readers should avoid treating media speculation about the report’s recommendations as an adopted government policy.
Why it matters for the Indian economy
Banking reform affects investment, payments, trade and financial inclusion. A sound system channels savings into productive credit, manages risk and supports monetary-policy transmission. The committee links these core functions with the 2047 development objective.
For public-sector banks, the review may be relevant to governance, capital planning, technology adoption, workforce capabilities and lending priorities. For RRBs and cooperative banks, the regulatory and institutional review could examine how to improve resilience and service delivery without losing their local-development role. For NBFCs and DFIs, the capital and funding questions are important because different institutions meet different credit needs.
However, the distinction between a review and an implemented reform is essential. The committee will recommend; the competent authorities will decide whether and how to act. Changes to statutes, regulations, RBI directions or PSL rules would require separate formal action.
Background: key institutions and concepts to revise
- Ministry of Finance: The Union ministry responsible for financial-sector policy, expenditure, revenue and related government functions.
- Department of Financial Services: Handles policy matters relating to banks, insurance and pension sectors under the Ministry of Finance.
- Reserve Bank of India: India’s central bank, responsible for monetary policy, currency management and key regulatory and supervisory functions in the financial system.
- Regional Rural Banks: Institutions established to expand banking and credit in rural areas, with a statutory framework and sponsorship arrangements.
- NBFCs: Companies engaged in specified financial activities; they are regulated differently from banks and cannot perform every function of a bank.
- DFIs: Institutions designed to provide long-term finance for development-oriented sectors.
Exam relevance and possible MCQ areas
UPSC and State PSC: Financial-sector governance, RBI’s role, institutional regulation, financial inclusion, rural credit, capital markets and the relationship between banking and economic development.
Banking examinations: Committee chairperson and members, tenure, Department of Financial Services, PSL, Lead Bank Scheme, RRBs, cooperative banks, NBFCs and DFIs.
Possible MCQ areas: Who chairs the committee? What is its tenure? Which Union Budget announced it? Who is the Member Secretary by designation? Which two frameworks linked to inclusive credit delivery are specifically named? Does the committee itself regulate banks or issue binding RBI directions? The final question tests the difference between an advisory review body and a statutory regulator.
What to watch next
Future developments to track include the committee’s formal working arrangements, consultations, report and any subsequent government or regulatory action. For candidates, the most reliable source remains the Ministry of Finance or PIB announcement. Do not attribute a reform to the committee until it appears in an official report or government notification.
Official source
- Ministry of Finance / PIB: Constitution of the High Level Committee on Banking for Viksit Bharat, 30 October 2026
- Union Budget 2026–27 background: proposed High Level Committee on Banking
Related reading
- History of Banking Reforms in India
- C-DAC and Bank of India Quantum Technology MoU 2026
- Daily Current Affairs 31 October 2026
- Current Affairs Hub
Editorial note: This explainer summarises the official terms of reference. It does not imply that any recommendation has already been accepted or implemented.
