Union Finance Ministry Establishes High-Level Committee to Review Indian Banking Sector

New High-Level Panel Appointed

The Union finance ministry has formally constituted a high-level committee to review India’s banking sector and recommend structural, regulatory, and legislative reforms. The initiative aims to enhance the global competitiveness of domestic lenders and better align the financial system with the financing needs of a developing economy.

The High Level Committee on Banking for Viksit Bharat, initially announced during the Union Budget 2026-27 by Finance Minister Nirmala Sitharaman, is chaired by former Central Vigilance Commissioner Suresh N Patel. According to the finance ministry, Patel brings over three decades of banking experience, having previously served as managing director and chief executive officer of Andhra Bank and as an executive director at Oriental Bank of Commerce.

Committee Composition and Mandate

The panel includes several prominent figures from the financial and regulatory sectors:

• Chirairatna Murmu / Shirish Chandra Murmu: Reserve Bank of India Deputy Governor
• Padmaja Chunduru: Former Indian Bank Managing Director and Chief Executive Officer
• N S Vishwanathan: Former RBI Deputy Governor
• Department of Financial Services: The Joint Secretary (Banking) will serve as the member secretary.

The finance ministry stated that the committee has been given a six-month timeframe, concluding in April 2027, to finalize its work and submit recommendations.

Key Areas of Review

The committee's terms of reference cover multiple foundational aspects of the country's financial architecture:

• Priority Sector Lending (PSL): Reviewing the relevance, effectiveness, and coordination of the PSL framework and the Lead Bank Scheme to promote inclusive credit delivery.
• Capital Requirements: Assessing the capital needs of commercial banks, development financial institutions, and non-banking financial companies (NBFCs) to support sustained credit growth.
• Regulatory Frameworks: Examining existing legal guidelines for commercial, regional rural, and cooperative banks to improve operational efficiency and ease of access.
• Technology and Talent: Formulating a roadmap for adopting artificial intelligence and digital innovations while addressing cyber risk safeguards and workforce capacity building.

Industry Reactions and Broader Context

Industry experts have noted that the review arrives at a critical juncture for India's economic ambitions. Sachin Sachdeva, vice-president and sector head for financial sector ratings at Icra, stated that evaluating long-term capital requirements will be essential to supporting rising investment demands. Kuntal Sur, partner and leader for Financial Risk and Regulation at PwC India, added that the structural reforms are anticipated to enhance capital efficiency.

While the panel's formal terms of reference do not explicitly mandate consolidation proposals, recent remarks by government officials have highlighted the potential need for institutions with greater international scale and resilience. Additionally, industry expectations suggest the committee may deliberate on broader structural debates, such as corporate entry into banking, shareholder voting rights caps, and foreign direct investment approval processes.

Stakeholders and observers can verify official announcements and updates regarding the committee through the Ministry of Finance and Reserve Bank of India official communication channels.