Finance Ministry Appoints High-Level Committee to Review Banking Sector and Recommend Reforms

The Union finance ministry has established a high-level committee to review India's banking sector and propose structural, regulatory, and legislative reforms. According to an official statement, the panel aims to enhance the global competitiveness of Indian banks and support the financing needs of a growing economy.

Committee Leadership and Composition

• Chairperson: Suresh N Patel, former Central Vigilance Commissioner and former managing director and chief executive officer of Andhra Bank.
• Members: Shirish Chandra Murmu (RBI Deputy Governor), Padmaja Chunduru (former MD and CEO of Indian Bank), and N S Vishwanathan (former RBI Deputy Governor).
• Member Secretary: Joint Secretary (Banking) in the Department of Financial Services.
• Timeline: The panel has been given a six-month mandate to complete its work, with a deadline set for April 2027.

Key Areas of Review

The committee was first announced by Finance Minister Nirmala Sitharaman in the Union Budget 2026-27. Its comprehensive terms of reference include:

• Priority Sector Lending and Lead Bank Scheme: Assessing relevance, effectiveness, and coordination for inclusive credit delivery.
• Capital Requirements: Evaluating funding sources and mechanisms for banks, development financial institutions, and non-banking financial companies (NBFCs) to sustain credit growth.
• Cost of Capital: Examining differences in business capital costs and suggesting measures to boost private investment.
• Regulatory and Legal Frameworks: Reviewing rules governing commercial, regional rural, and cooperative banks to improve efficiency and access.
• Technology and Talent: Preparing a roadmap for artificial intelligence, digital innovation, cyber risk safeguards, and workforce capacity building.

Industry Context and Perspectives

While the formal terms of reference do not explicitly mandate banking consolidation, discussions surrounding the scale and international presence of financial institutions have highlighted potential structural changes. Industry experts, including representatives from Icra and PwC India, noted that long-term capital requirements, digital transformation, and risk management will be critical for meeting next-generation credit demands.

Stakeholders can verify official details and review the terms of reference through announcements published by the Ministry of Finance.