The Government of India has constituted a high-level committee to review the country’s banking sector and recommend structural, regulatory, institutional and legislative reforms. Named the High Level Committee on Banking for Viksit Bharat, the panel will examine how Indian banks can become more globally competitive, financially inclusive and resilient while supporting the country’s long-term economic ambitions.
The committee will be chaired by former Central Vigilance Commissioner Suresh N. Patel and has been given six months to submit its recommendations. Its mandate includes reviewing banking regulations, capital requirements, priority-sector lending, digital innovation, artificial intelligence (AI), cybersecurity and the funding needs of banks and non-banking financial companies (NBFCs).
Key Takeaways
- The Centre constituted the High Level Committee on Banking for Viksit Bharat on October 30, 2026.
- Former Central Vigilance Commissioner Suresh N. Patel will chair the committee.
- RBI Deputy Governor Shirish Chandra Murmu is among its members.
- The committee has a six-month tenure, taking its work towards April 2027.
- It will review banking regulations, capital requirements and lending practices.
- Priority-sector lending and the Lead Bank Scheme will also come under review.
- The panel will recommend a roadmap for AI adoption and digital innovation with cybersecurity safeguards.
- Its broader objective is to strengthen India’s banking system for the Viksit Bharat 2047 vision.
Government Constitutes Banking Reform Committee
The Ministry of Finance announced the formation of the committee on October 30, 2026.
The initiative was originally announced by Finance Minister Nirmala Sitharaman in her Union Budget 2026–27 speech. The government wants a comprehensive assessment of the banking system to identify changes needed to support India’s next phase of economic development.
The committee will examine whether existing banking practices, regulatory structures and capital arrangements are adequate for an economy with growing requirements for infrastructure investment, business financing and financial inclusion.
It will also study international banking practices and identify approaches that could be adapted to India’s financial system.
The government has given the committee six months to complete its work and submit recommendations.
Who Are the Members of the High-Level Banking Committee?
The committee brings together former banking and regulatory officials alongside a serving RBI Deputy Governor.
Committee composition
| Member | Position in the committee | Background |
|---|---|---|
| Suresh N. Patel | Chairman | Former Central Vigilance Commissioner |
| Shirish Chandra Murmu | Member | Deputy Governor, RBI |
| Padmaja Chunduru | Member | Former MD and CEO, Indian Bank |
| N. S. Vishwanathan | Member | Former Deputy Governor, RBI |
| Joint Secretary (Banking) | Member Secretary | Department of Financial Services |
The inclusion of RBI leadership and former banking executives is intended to bring regulatory, operational and institutional perspectives into the review.
The committee’s recommendations will be submitted to the government for consideration. Its formation does not automatically change existing banking regulations.
Seven Major Areas the Committee Will Review
The Finance Ministry has outlined seven broad terms of reference for the committee.
| No. | Area of review | Main objective |
|---|---|---|
| 1 | Banking practices and prudential norms | Identify global best practices and develop globally competitive banks |
| 2 | Regulatory and legal frameworks | Improve efficiency across commercial, regional rural and cooperative banks |
| 3 | Long-term capital requirements | Assess funding needs of banks, DFIs and NBFCs |
| 4 | Cost of capital for businesses | Recommend measures to encourage private investment |
| 5 | AI and digital innovation | Develop a technology roadmap with cybersecurity safeguards |
| 6 | Priority Sector Lending and Lead Bank Scheme | Improve inclusive and data-driven credit delivery |
| 7 | Additional matters | Examine other banking issues referred by the government |
These areas cover both the financial strength of banks and their ability to support businesses, households and India’s broader economic development.
1. Building Globally Competitive Indian Banks
One of the committee’s major responsibilities is to assess India’s banking practices against international standards.
The panel will review existing prudential norms and identify global approaches that could be adapted to Indian conditions.
Prudential norms are rules designed to ensure that banks maintain sufficient capital, manage lending risks and remain financially stable.
The review will also consider a roadmap for creating globally competitive Indian banks.
The objective is to strengthen the capacity of domestic lenders to finance large infrastructure projects, industrial expansion and international business activity.
The question of bank consolidation and the creation of larger financial institutions may feature in the wider policy debate. However, the committee’s published terms of reference do not explicitly mandate a specific merger programme.
2. Review of Banking Regulations and Legal Frameworks
The committee will examine the regulatory and legal frameworks governing different categories of banks.
These include:
- Commercial banks
- Regional Rural Banks (RRBs)
- Cooperative banks
The objective is to identify regulatory provisions that could be updated to improve efficiency and make banking easier for institutions and customers.
Regional Rural Banks and cooperative banks are particularly important because they serve rural communities, agricultural borrowers, small businesses and customers who may have limited access to large commercial lenders.
The panel will consider how these institutions can operate more efficiently while maintaining appropriate regulatory safeguards.
3. Assessing Capital Requirements of Banks and NBFCs
India’s growing economy will require substantial financing for infrastructure, manufacturing, housing, technology and private-sector investment.
The committee will assess the long-term capital requirements of banks, Development Financial Institutions (DFIs) and NBFCs.
It will also recommend possible funding sources and mechanisms to support sustainable credit growth.
The review is important because banks need adequate capital to expand lending while maintaining their ability to absorb financial losses.
NBFCs also play a significant role in financing segments that traditional banks may not serve as extensively, including smaller businesses, vehicle purchases and certain consumer-credit categories.
The committee’s recommendations could influence how financial institutions mobilise capital and expand their lending capacity.
4. Reducing the Cost of Capital for Businesses
Another important area is the difference in the cost of capital faced by businesses.
The cost of capital refers to the expense associated with raising money through debt or equity.
Higher financing costs can discourage companies from investing in factories, infrastructure, technology and business expansion.
The committee will examine these differences and recommend policy options to encourage private investment.
This review could be particularly relevant for small and medium-sized enterprises, which often face higher borrowing costs and more limited access to financing than large corporations.
The broader objective is to make credit more accessible and support productive investment.
5. AI and Digital Innovation in Banking
Artificial intelligence and digital technologies are changing how banks assess borrowers, detect fraud, process transactions and interact with customers.
The committee has been specifically asked to prepare a roadmap for AI and digital innovation across banking institutions.
However, the government has also highlighted the need for safeguards against cyber risks.
The panel will examine how banks can adopt new technologies without compromising customer data, financial security or operational resilience.
Potential areas of consideration include:
- AI-powered fraud detection and transaction monitoring.
- Automated credit assessment and risk management.
- Digital customer-service systems.
- Improved cybersecurity infrastructure.
- Protection of sensitive banking and customer information.
- Training and recruitment of technology professionals.
The committee will also recommend strategies for talent acquisition and capacity building to prepare banking employees for technological changes.
6. Priority Sector Lending and Lead Bank Scheme Under Review
The committee will review two important frameworks used to support inclusive credit distribution in India.
Priority Sector Lending
Priority Sector Lending (PSL) requires banks to direct a specified portion of their lending towards sectors considered important for economic development and financial inclusion.
These sectors include agriculture, micro and small enterprises, education, housing and other eligible categories.
The committee will examine whether the existing framework remains effective and aligned with India’s changing economic requirements.
Lead Bank Scheme
The Lead Bank Scheme was introduced to improve coordination between banks, government departments and other financial institutions at the district level.
It aims to expand access to banking and credit, particularly in underserved areas.
The committee will assess whether the scheme can be made more effective through better coordination, data-driven lending and improved monitoring.
Both reviews could influence how banks distribute credit across different sectors and regions.
7. Why the Banking Review Matters for India’s Economy
India’s banking system plays a central role in financing economic activity.
Banks provide credit to businesses, support household consumption, finance infrastructure and facilitate domestic and international payments.
As the economy expands, the demand for financing is also expected to increase.
The government believes that banks must have sufficient capital, modern technology and effective regulatory structures to support this growth.
The committee’s recommendations could therefore influence several parts of the financial system, including:
- Bank capital and lending capacity.
- Regulation of commercial and cooperative banks.
- Credit availability for smaller businesses.
- Funding arrangements for infrastructure projects.
- Digital banking and cybersecurity.
- Financial inclusion and rural credit delivery.
However, the committee is currently a review and recommendation exercise. Any regulatory or legislative changes will require separate government or regulatory action.
The Bigger Picture
The formation of the committee reflects India’s attempt to prepare its banking system for a much larger economy by 2047. The challenge is not simply to increase the size of banks but also to ensure that they can finance investment, manage risks, adopt new technologies and serve a wider range of customers.
The review comes at a time when Indian financial institutions are attracting international investment and facing growing demand for credit. Its recommendations could shape the next phase of banking policy, particularly around capital availability, regulation, technology and financial inclusion.
Looking Ahead
The committee will spend the next six months examining India’s banking practices, regulations and capital requirements before submitting its recommendations. Its findings on priority-sector lending, digital innovation and the creation of globally competitive banks will be particularly important for the future direction of the sector.
The next step will be the government’s response to the recommendations and whether they lead to changes in banking regulations, legislation or institutional structures. Until then, existing banking rules remain in force, and the committee’s proposals should not be treated as announced policy changes.
Frequently Asked Questions
1. Why has the government formed a high-level banking committee?
The government wants to review India’s banking sector and recommend structural, institutional, regulatory and legislative reforms to make banks globally competitive, financially inclusive and resilient.
2. Who will chair the banking reform committee?
Former Central Vigilance Commissioner Suresh N. Patel will chair the High Level Committee on Banking for Viksit Bharat.
3. Who are the other members?
The named expert members are RBI Deputy Governor Shirish Chandra Murmu, former Indian Bank MD and CEO Padmaja Chunduru, and former RBI Deputy Governor N. S. Vishwanathan. The Joint Secretary (Banking) will serve as Member Secretary.
4. How long will the committee take to submit its recommendations?
The committee has a six-month tenure, with its work expected to run until approximately April 2027.
5. Will the committee recommend bank mergers?
The committee is tasked with developing a roadmap for globally competitive banks. However, its official terms of reference do not explicitly direct it to recommend a particular bank-merger programme.
6. Will AI and digital banking be part of the review?
Yes. The committee will prepare a roadmap for AI and digital innovation in banking institutions, including safeguards against cybersecurity risks and recommendations for workforce development.
7. What is Priority Sector Lending?
Priority Sector Lending is an RBI-regulated framework requiring banks to allocate a specified share of eligible lending to important sectors such as agriculture, small businesses and other areas supporting financial inclusion.
8. Will the committee’s formation immediately change banking rules?
No. The committee will study the banking system and submit recommendations. Any resulting changes will require separate action by the government or relevant regulators.
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