The Government of India has constituted the High Level Committee on Banking for Viksit Bharat. The Ministry of Finance announced it on 30 October 2026. Finance Minister Nirmala Sitharaman had first announced the committee in her Budget speech for 2026-27 on 1 February 2026.
The committee will review India's banking sector. It will recommend the structural, institutional, regulatory and legislative reforms needed to make the sector globally competitive, financially inclusive and resilient by 2047, the target year of the Viksit Bharat vision. It has six months to report.
The panel took nine months to form after the Budget. In August, the Finance Minister said the announcement would come "soon". Its terms of reference are broad. They cover bank capital, regional rural and cooperative banks, the cost of credit, artificial intelligence, priority sector lending and the Lead Bank Scheme, which dates to 1969.
Who is on the committee
The committee has a chairman, three expert members and a member secretary drawn from the Finance Ministry.
| Role | Name | Background |
|---|---|---|
| Chairman | Suresh N. Patel | Former Central Vigilance Commissioner |
| Member | Shirish Chandra Murmu | Serving Deputy Governor, Reserve Bank of India |
| Member | Padmaja Chunduru | Former MD & CEO, Indian Bank |
| Member | N.S. Vishwanathan | Former Deputy Governor, Reserve Bank of India |
| Member Secretary | Joint Secretary (Banking) | Department of Financial Services (DFS), Ministry of Finance |
The mix is worth noting. India's best-known banking reviews were chaired by central bankers or bankers. M. Narasimham, who chaired the 1991 and 1998 committees, was a former RBI Governor. P.J. Nayak, whose committee examined bank boards in 2014, was a former Axis Bank chairman.
This time the chair comes from the vigilance side. The Central Vigilance Commission is the statutory anti-corruption watchdog for the Central Government and public sector banks. Its chair is joined by a serving RBI Deputy Governor, so the regulator is part of the review from the start. A former RBI Deputy Governor and a former public sector bank chief complete the panel.
The Department of Financial Services, which provides the member secretary, is the part of the Finance Ministry that deals with public sector banks, insurers and financial inclusion schemes.
The six terms of reference, decoded
The terms of reference (ToR) set the committee's agenda. Each one touches a live issue in Indian banking.
1. Prudential norms and "globally competitive banks"
The committee will assess current banking practices and prudential norms, identify global best practices, adapt them for India, and prepare a roadmap for creating globally competitive banks.
Prudential norms are the safety rules banks must follow: how much capital to hold against risky loans, how to classify bad loans and how much to set aside for them. India follows the Basel III framework of the Basel Committee on Banking Supervision. The RBI is stricter than Basel on capital: it requires a minimum capital to risk-weighted assets ratio (CRAR) of 9%, against Basel's 8%. With the capital conservation buffer of 2.5%, the effective requirement is 11.5%.
"Globally competitive" usually means size and efficiency. Indian banks are small relative to the economy. That is why consolidation keeps coming up. A series of mergers cut the number of public sector banks from 27 in 2017 to 12; the last round took effect on 1 April 2020. Notably, the ToR do not mention mergers or ownership by name.
2. The regulatory and legal framework, including RRBs and cooperative banks
The committee will review the legal and regulatory framework for banks, including Regional Rural Banks (RRBs) and cooperative banks, and suggest reforms for ease of doing banking.
These two segments have the most complicated rulebooks:
- RRBs were created under an ordinance in 1975 and then the Regional Rural Banks Act, 1976. The first five began on 2 October 1975. They are jointly owned by the Centre, the State and a sponsor bank. The latest round of amalgamation, under the "One State, One RRB" approach, cut their number from 43 to 28 from 1 May 2025.
- Cooperative banks were long under "dual control": the RBI regulated their banking functions while State Registrars of Cooperative Societies controlled their management. The Banking Regulation (Amendment) Act, 2020 brought urban and multi-State cooperative banks under fuller RBI supervision. The Banking Laws (Amendment) Act, 2025 made further changes. Among other things, it allowed up to four nominees per account and extended the maximum tenure of cooperative bank directors from 8 to 10 years.
3. Long-term capital, including DFIs and NBFCs
The committee will estimate the long-term capital requirements of banks, Development Financial Institutions (DFIs) and Non-Banking Financial Companies (NBFCs), and recommend funding sources and enabling mechanisms to support credit growth.
This matters because the target is growth over two decades. Infrastructure needs long-term loans, and banks fund themselves largely with short-term deposits. Lending long against short deposits creates an asset-liability mismatch. India set up a new DFI, the National Bank for Financing Infrastructure and Development (NaBFID), under a 2021 Act for this reason.
NBFCs now come under the RBI's scale-based regulation, which applies stricter rules as a lender grows larger. The committee's job is to estimate how much capital all these lenders will need, and where it can come from.
4. Cost of capital and private investment
The committee will examine differences in the cost of capital for business and suggest ways to boost private investment.
The cost of capital is what a firm pays to raise money, through loans or equity. If borrowing is dearer in India than in competing economies, Indian firms invest less and their exports cost more. The RBI's policy rate sets the base. The rest depends on bank costs, bad-loan risk, government borrowing and market depth.
5. AI, digital innovation and cyber safeguards
The committee will prepare a roadmap for artificial intelligence and digital innovation in banks, with safeguards against cyber risks. It will also suggest a strategy for talent acquisition and capacity building.
This is the most forward-looking clause. Indian banking is already heavily digital through UPI and account aggregators. The cyber risks grow with it, and so does the demand for staff with technology skills.
6. Priority Sector Lending and the Lead Bank Scheme
The committee will review the Priority Sector Lending (PSL) framework and the Lead Bank Scheme. It will check whether they are still relevant and effective, and how well they deliver credit that is inclusive, balanced and data-driven.
This is the clause most likely to appear in an exam, so it is covered in detail below. A seventh clause lets the Government refer any other matter to the committee.
Priority Sector Lending: the rules being reviewed
Priority sector lending requires banks to lend a fixed share of their credit to sectors that might otherwise be under-served. The targets are a percentage of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE), whichever is higher.
The current rules are the RBI's Priority Sector Lending (Targets and Classification) Directions, 2025, in force from 1 April 2025. They replaced the 2020 directions.
| Target (domestic commercial banks) | Share of ANBC or CEOBE |
|---|---|
| Total priority sector | 40% |
| Agriculture | 18% |
| — of which small and marginal farmers | 10% |
| Micro enterprises | 7.5% |
| Weaker sections | 12% |
RRBs have a higher overall target of 75%. For urban cooperative banks, the 2025 directions cut the overall target from 75% to 60%. The same directions raised the loan limits that qualify as priority sector lending. Education loans went up from ₹20 lakh to ₹25 lakh, and loans for renewable energy projects from ₹30 crore to ₹35 crore per borrower. Transgender persons were added to the "weaker sections" category.
A bank that falls short of its target has to deposit the shortfall in funds such as NABARD's Rural Infrastructure Development Fund (RIDF), which earn lower returns.
How PSL evolved
- 1969: banks were nationalised, and the social-banking agenda began.
- 1972: priority sector lending was formalised, based on a 1971 RBI study group report, at first without numerical targets.
- 1974: banks were asked to raise priority sector lending to one-third of credit by 1979.
- 1980: the Krishnaswamy Committee recommended a 40% target by 1985, with sub-targets for agriculture and weaker sections. The 40% figure still stands today.
The Lead Bank Scheme, since 1969
The Lead Bank Scheme was introduced by the RBI in 1969. It came from two reports that year:
- The Gadgil Study Group of the National Credit Council recommended an "area approach" to planning credit in backward regions.
- The Nariman Committee recommended that each district be assigned to one bank, which would lead banking development there.
Under the scheme, every district has a lead bank. The lead bank coordinates the district credit plan with other banks and with government departments. At the State level, the State Level Bankers' Committee (SLBC) does the same job. A 2009 review by an RBI committee under Usha Thorat recommended keeping the scheme. The new committee will decide whether it still fits an economy where most banking happens on phones.
How India has reviewed its banks before
| Year | Committee | Main contribution |
|---|---|---|
| 1991 | Narasimham Committee I (Committee on the Financial System) | Cut statutory pre-emptions such as the SLR and CRR, introduced prudential norms, opened the door to new private banks |
| 1998 | Narasimham Committee II (Committee on Banking Sector Reforms) | Higher capital adequacy, tighter bad-loan rules, the case for merging strong banks |
| 2008 | Raghuram Rajan Committee (Committee on Financial Sector Reforms) | A broad agenda of "a hundred small steps" for the financial sector |
| 2014 | P.J. Nayak Committee (governance of bank boards) | Proposed a Banks Board Bureau to professionalise appointments at public sector banks |
The Nayak recommendation led to the Banks Board Bureau in 2016. In 2022 it was replaced by the Financial Services Institutions Bureau (FSIB), which recommends heads of public sector banks and financial institutions.
The 2026 committee is the first broad review aimed at a 2047 horizon. The Narasimham committees were about cleaning up a repressed, state-dominated system. This one starts from healthier banks, with bad loans much reduced. You can read more on that in our article on public sector banks and NPAs. Its brief is to fund long-term growth.
What to watch
The committee has six months from its constitution, so its report is due around April-May 2027. Recommendations on law would need amendments to statutes such as the Banking Regulation Act, 1949, the RRB Act, 1976 and the State cooperative laws. Recommendations on prudential norms and PSL would mostly be for the RBI to implement through its directions.
The IDBI Bank strategic sale is running separately, and the Finance Ministry issued a clarification on that process on 29 October. You can read about the background in our article on IDBI Bank's restructuring.
🔑 Revision block
The event. High Level Committee on Banking for Viksit Bharat constituted on 30 October 2026; announced in Budget 2026-27 (1 February 2026); six-month tenure.
Composition. Chair Suresh N. Patel (former CVC); members Shirish Chandra Murmu (Deputy Governor, RBI), Padmaja Chunduru (former MD & CEO, Indian Bank), N.S. Vishwanathan (former Deputy Governor, RBI); Member Secretary JS (Banking), DFS.
ToR in one line each. Prudential norms and globally competitive banks; laws for banks including RRBs and cooperative banks; long-term capital for banks, DFIs, NBFCs; cost of capital and private investment; AI and digital roadmap with cyber safeguards and talent; review of PSL and the Lead Bank Scheme.
PSL figures. 40% of ANBC (domestic banks); agriculture 18%; small and marginal farmers 10%; micro enterprises 7.5%; weaker sections 12%; RRBs 75%; UCBs 60% (from 75%); 2025 directions in force 1 April 2025.
Origins. Lead Bank Scheme 1969 (Gadgil Study Group + Nariman Committee); PSL formalised 1972; 40% target from Krishnaswamy Committee (1980).
Earlier reviews. Narasimham I (1991), II (1998); Rajan (2008); Nayak (2014) → Banks Board Bureau (2016) → FSIB (2022).
Context. PSBs 27 → 12 (last mergers 1 April 2020); RRBs 43 → 28 (1 May 2025); CRAR 9% + CCB 2.5%.
🎯 Practice MCQs
Q1. The High Level Committee on Banking for Viksit Bharat was first announced in: (a) The RBI's Monetary Policy Statement of February 2026 (b) The Economic Survey 2025-26 (c) The Union Budget speech for 2026-27 (d) The Finance Commission's report
→ (c) The Finance Minister announced it in the Budget speech; the committee was constituted on 30 October 2026.
Q2. Which of the following is NOT among the committee's terms of reference? (a) Recommending the privatisation of specific public sector banks (b) A roadmap for AI and digital innovation in banks (c) Reviewing the Priority Sector Lending framework (d) Assessing the long-term capital needs of DFIs and NBFCs
→ (a) The terms of reference do not mention ownership or the sale of particular banks.
Q3. Under the RBI's 2025 directions, the overall priority sector lending target for domestic commercial banks is: (a) 18% of ANBC (b) 33.3% of ANBC (c) 60% of ANBC (d) 40% of ANBC or CEOBE, whichever is higher
→ (d) The 40% figure dates back to the Krishnaswamy Committee's recommendation of 1980.
Q4. The Lead Bank Scheme drew on the recommendations of: (a) The Narasimham Committee and the Rajan Committee (b) The Gadgil Study Group and the Nariman Committee (c) The Krishnaswamy Committee and the Usha Thorat Committee (d) The P.J. Nayak Committee and the Tarapore Committee
→ (b) Both reported in 1969: Gadgil proposed the area approach, and Nariman the idea of a lead bank for each district.
Q5. Consider the following statements: 1. The Banks Board Bureau was set up on the recommendation of the P.J. Nayak Committee. 2. The Banks Board Bureau was replaced by the Financial Services Institutions Bureau in 2022. Which of the statements given above is/are correct? (a) 1 only (b) Both 1 and 2 (c) 2 only (d) Neither 1 nor 2
→ (b) The BBB was set up in 2016 and replaced by the FSIB in 2022.
Q6. Which agricultural sub-target applies to small and marginal farmers under priority sector lending for domestic commercial banks? (a) 7.5% (b) 12% (c) 18% (d) 10%
→ (d) It is part of the 18% agriculture target. 7.5% is micro enterprises and 12% is weaker sections.
Q7. "One State, One RRB" amalgamation, effective 1 May 2025, reduced the number of Regional Rural Banks from: (a) 43 to 28 (b) 56 to 43 (c) 196 to 43 (d) 28 to 12
→ (a) Earlier rounds had already reduced them from 196 to 43.
Q8. The minimum capital to risk-weighted assets ratio required by the RBI, before the capital conservation buffer, is: (a) 8% (b) 11.5% (c) 9% (d) 4.5%
→ (c) Basel III requires 8%; the RBI requires 9%, or 11.5% with the 2.5% buffer.
Q9. Which Act brought urban and multi-State cooperative banks under fuller RBI supervision? (a) Banking Laws (Amendment) Act, 2025 (b) Regional Rural Banks Act, 1976 (c) Multi-State Cooperative Societies Act, 2002 (d) Banking Regulation (Amendment) Act, 2020
→ (d) It reduced the "dual control" over cooperative banks.
Q10. The Narasimham Committee of 1998 was formally known as: (a) The Committee on Banking Sector Reforms (b) The Committee on the Financial System (c) The Committee on Financial Sector Reforms (d) The Committee on Governance of Bank Boards
→ (a) The 1991 committee was on the Financial System; the 2008 Rajan committee was on Financial Sector Reforms.
📋 How this gets asked (PYQ pattern)
Banking committees are a recurring item in the CDS economy section, and a new committee brings out three kinds of question.
The first is the matching question: committee to subject. Narasimham, Nayak, Rajan, Gadgil, Nariman and Krishnaswamy are the usual names, and the examiner often pairs two committees that sound alike. The 1991 and 1998 Narasimham reports, and the "Financial System" versus "Financial Sector Reforms" titles, are the standard trap.
The second is the priority sector question: the 40% target, the agriculture and weaker-section sub-targets, and which kinds of loan qualify. Statement questions on PSL appear regularly, and the 2025 changes (UCB target, education-loan limit, transgender persons in weaker sections) are fresh material.
The third is the institution question: what RRBs are, who owns them, when they began, and what the Lead Bank Scheme does in a district.
The fresh hook this cycle is the committee itself: who chairs it, who sits on it, how long it has and what it must review. Expect a "which of the following is NOT in its terms of reference" item.
Preparing for CDS? Keep a one-page table of banking committees, with year, chair and main recommendation, and add this one at the bottom. Revise it with our notes on the banking sector and monetary policy. Build the base with our CDS/OTA study material, follow the daily CDS current affairs, and train with serving-standard faculty in the upcoming Cavalier courses in Delhi.
Source: PIB / Ministry of Finance, "The Government of India Constitutes the 'High Level Committee on Banking for Viksit Bharat'", 30 October 2026. Priority sector targets checked against the RBI's Priority Sector Lending Directions, 2025; history of banking committees, RRBs and cooperative bank laws cross-checked with RBI documents and standard references.
✍️ Written by Aditya Tiwari — Economy & current-affairs faculty at The Cavalier. Reviewed by the Cavalier Faculty Desk.