🗞️ Why in News The Government of India has constituted a High Level Committee on Banking for Viksit Bharat, the Ministry of Finance announced on 30 October 2026. Chaired by Suresh N. Patel, former Central Vigilance Commissioner, it is to review India’s banking sector and recommend “structural, institutional, regulatory and legislative reforms” to make it globally competitive, financially inclusive and resilient for Viksit Bharat, 2047. Its tenure is six months.
This is a review, not a reform. The committee has made no recommendations yet; what it has is a mandate that runs from prudential norms and bank laws to the cost of capital, artificial intelligence and two instruments of inclusion that date back decades. Read it as a list of the questions the Government wants answered before banking’s next round of change.
What the Committee Is
| Role | Name and office, as announced |
|---|---|
| Chairman | Suresh N. Patel, former Central Vigilance Commissioner |
| Member | Shirish Chandra Murmu, Deputy Governor, Reserve Bank of India |
| Member | Padmaja Chunduru, Former MD and CEO, Indian Bank |
| Member | N S Vishwanathan, Former Deputy Governor, Reserve Bank of India |
| Member Secretary | The Joint Secretary (Banking), Department of Financial Services |
| Tenure | Six months |
The release gives no date on which the six months begin and sets no date for a report.
From a Budget Proposal to a Committee
The committee has its origin in the Union Budget 2026-27, presented on 1 February 2026. In paragraph 42 of her speech, Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs, said: “I propose setting up a ‘High Level Committee on Banking for Viksit Bharat’, to comprehensively review the sector and align it with India’s next phase of growth, while safeguarding financial stability, inclusion and consumer protection.”
The paragraph before it gave the reason. The Indian banking sector, she said, “is characterised by strong balance sheets, historic highs in profitability, improved asset quality and coverage exceeding 98% of villages in the country”, and so was “well-placed to futuristically evaluate the measures needed to continue on the path of reform-led growth”.
A proposal in February and a committee in October are two different events: the Budget announced the idea, and the 30 October release records that the committee has now been constituted.
The Seven Terms of Reference
The Banking for Viksit Bharat committee’s mandate
Covers how the committee came about, who sits on it and the terms of reference it is to review.
| # | The committee is to... | In short |
|---|---|---|
| 1 | “Assess the present banking practices and prudential norms, identifying global best practices, and adapt them suitably for the Indian banking system”, with a roadmap for “globally competitive banks” | Norms and global practice |
| 2 | “Review the existing regulatory and legal frameworks for banks, including Regional Rural Banks and Cooperative Banks”, and suggest reforms for efficiency and ease of doing banking | Laws and regulation |
| 3 | Assess “the long-term capital requirements for banks, including Development Financial Institutions and Non-Banking Financial Companies”, with recommendations on funding sources | Capital needs |
| 4 | “Examine differences in cost of capital for business, and suggest policy options to boost private investment for sustainable growth” | Cost of capital |
| 5 | “Prepare a roadmap for AI and digital innovation in banking institutions”, with safeguards against cyber risks, and a strategy for talent acquisition and capacity building | Technology and people |
| 6 | “Review the Priority Sector Lending framework and Lead Bank Scheme to assess their relevance, effectiveness, and coordination” in credit delivery and financial inclusion | Inclusion instruments |
| 7 | “Make recommendations on any other matter referred to the Committee by the Government of India” | Residual |
Two points stand out. The scope goes beyond commercial banks to RRBs, co-operative banks, Development Financial Institutions and NBFCs. And the fourth term is about the economy, not only banks: why capital costs differ for businesses, and how to raise private investment.
Two Instruments Under Review: Priority Sector Lending and the Lead Bank Scheme
Priority Sector Lending (PSL) obliges banks to lend a set share of their credit to sectors such as agriculture and micro enterprises. For context, the current RBI Master Directions are dated 24 March 2025 and came into effect on 1 April 2025 (updated as on 11 September 2026). Targets are set as a share of Adjusted Net Bank Credit (ANBC) or the Credit Equivalent of Off-Balance Sheet Exposures (CEOBSE), whichever is higher:
| Lender | Target |
|---|---|
| Domestic commercial banks (excluding RRBs and small finance banks) and foreign banks with 20 branches and above | Total priority sector 40% |
| Within that, for these banks | Agriculture 18% (14% for non-corporate farmers, of which 10% for small and marginal farmers); micro enterprises 7.5%; weaker sections 12% |
| Regional Rural Banks | 75% |
| Urban co-operative banks | 60% |
The Lead Bank Scheme (LBS) was introduced by the RBI in December 1969, after the Gadgil Study Group reported in October 1969 and the Nariman Committee in November 1969. The RBI designates a commercial bank as the Lead Bank in each district to coordinate banks, the government, NABARD and others so that credit reaches the priority sectors. It works through three tiers: the Block Level Bankers’ Committee at the base, the District Consultative Committee and District Level Review Committee in the middle, and the State Level Bankers’ Committee (SLBC) or UT Level Bankers’ Committee at the apex. The 2025 master circular gives the context in numbers: as on 31 March 2025, 12 public sector banks and two private sector banks (Jammu and Kashmir Bank and ICICI Bank) were lead banks in 782 districts.
The recent background matters here: the RBI issued revised Lead Bank Scheme guidelines on 19 June 2026, after a comprehensive review, superseding all earlier instructions. So the committee will be assessing a scheme the RBI has only just rewritten.
Mains Lens: What a Sector-Wide Review Has to Balance
- Growth with stability: the Budget framed the review around three safeguards: financial stability, inclusion and consumer protection. A push for “globally competitive banks” must not weaken any of them.
- A wider net: the RBI’s committee chaired by P.J. Nayak, whose report the RBI placed on its website on 13 May 2014, looked at the governance of bank boards. This one covers the whole sector, including RRBs, co-operative banks, DFIs and NBFCs.
- Old tools of directed credit: the Lead Bank Scheme dates from 1969, and PSL sets lending shares by rule. The question is whether they still deliver credit that is “inclusive, balanced, and data-driven”, as the terms of reference put it.
- Technology and risk together: AI and digital banking come paired with cyber safeguards and a future-ready workforce; the Financial Stability and Development Council’s cyber security strategy (23 October) is the companion read.
- Composition: the committee joins a former vigilance chief, a serving and a former RBI Deputy Governor, and a former MD and CEO of Indian Bank, with the Joint Secretary (Banking) of the Department of Financial Services as Member Secretary.
What comes next: the committee has a six-month tenure. Its recommendations will go to the Government, and any legislative reform it proposes would still need Parliament. For the law it may revisit, see the Banking Regulation Act background in the Yes Bank AT-1 piece (17 October) and the IDBI Bank strategic sale (14 October, background); for the context of rural credit, the editorial on financing rural prosperity (1 October).
UPSC Relevance
GS Paper 3: Indian economy and issues relating to mobilisation of resources, growth and development; inclusive growth; banking sector reforms.
GS Paper 2: Government policies and interventions; statutory and regulatory bodies (RBI).
Prelims: the committee’s chair, members and tenure; PSL targets; the Lead Bank Scheme (1969, three tiers, revised 2026); the Banking Regulation Act, 1949; the RRB Act, 1976 and RRB ownership.
Mains: “India’s banks are stronger than at any point in recent memory, yet the Government has set up a committee to review the whole sector. Discuss the case for such a review, with reference to priority sector lending, the Lead Bank Scheme and the regulation of co-operative and regional rural banks.” (GS3, 250 words)
📌 Facts Corner, Knowledgepedia
Prelims, statement-ready facts:
- High Level Committee on Banking for Viksit Bharat: constituted, as the Ministry of Finance announced on 30 October 2026
- Chairman: Suresh N. Patel, former Central Vigilance Commissioner; tenure six months
- Members: Shirish Chandra Murmu (Deputy Governor, RBI), Padmaja Chunduru (Former MD and CEO, Indian Bank), N S Vishwanathan (Former Deputy Governor, RBI)
- Member Secretary: Joint Secretary (Banking), Department of Financial Services
- Proposed in the Budget speech 2026-27 (1 February 2026), paragraph 42
- PSL: 40% of ANBC or CEOBSE for domestic commercial banks; agriculture 18%, micro enterprises 7.5%, weaker sections 12%
- PSL targets: Regional Rural Banks 75%; urban co-operative banks 60%
- Lead Bank Scheme: introduced by RBI in December 1969; revised guidelines issued 19 June 2026
- RRB share capital: Centre 50%, State government 15%, sponsor bank 35% (RRB Act, 1976)
Prelims, the traps:
- Murmu is a serving RBI Deputy Governor; Vishwanathan is a former one
- Proposed is not constituted: the Budget proposed the committee on 1 February; it was constituted in October
- The committee has made no recommendations; it is to review and suggest
- The Nayak committee (report placed by RBI on 13 May 2014) reviewed bank board governance, not the whole sector
- Lead Bank Scheme tiers: BLBC (block), DCC and DLRC (district), SLBC or UTLBC (State or UT)
Mains, arguments and keywords:
- Keywords: globally competitive banks, prudential norms, cost of capital, directed credit, financial inclusion, cyber resilience, future-ready workforce
- Balance: competitiveness and private investment against financial stability, inclusion and consumer protection
Interview, be ready for:
- “Banks are profitable. Why review them now?” From strength: the Budget argued strong balance sheets make this the time to plan the next phase of reform.
Sources: Press Information Bureau, Ministry of Finance, “High Level Committee on Banking for Viksit Bharat” release, 30 October 2026 (PRID 2330598). Background: Union Budget 2026-27, Budget Speech, 1 February 2026, paragraphs 41 and 42. Reserve Bank of India, Master Direction on Priority Sector Lending, background (RBI/FIDD/2024-25/128, 24 March 2025, updated as on 11 September 2026). RBI background: circular on the revised Lead Bank Scheme (RBI/2026-27/150, 19 June 2026) and press release of the same date; Master Circular on the Lead Bank Scheme (RBI/2025-26/04, 1 April 2025). The Banking Regulation Act, 1949. The Regional Rural Banks Act, 1976. RBI press release on the Nayak committee report, 13 May 2014.
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