Finance Minister Nirmala Sitharaman on Sunday proposed the setting up of a high-level committee to comprehensively review the banking sector and align it with India’s next phase of reform-led growth.

Observing that the banking sector today is characterised by strong balance sheets, historic highs in profitability, improved asset quality and coverage exceeding 98% of villages in the country, Sitharaman said we are well placed to futuristically evaluate the measures needed to continue on the path of ‘Viksit Bharat’.

“One point is about the high-level committee on banking reforms. As we have repeatedly noted, at least two major banks need to take the lead first. When I say a high-level committee will be formed, the terms of reference will need to be clearly defined. We are looking at a committee that examines the entire banking sector so it can provide recommendations to help us plan for banking in 2047," Sitharaman said in her Budget speech at the Lok Sabha.

The panel could look at bank ownership structures and creation of big lenders. It could also possibly look at consolidation of smaller public sector banks with the larger ones. 

"Since 2047 is our long-term goal, we need to understand the steps required in the banking space today. Based on the committee’s recommendations, we will move forward accordingly. The Department of Financial Services will also play a key role in shaping the roadmap for 2047,” Sitharaman said.

Announcing the formation of a high-level committee on banking for Viksit Bharat, the finance minister said the panel would review the structure, efficiency and preparedness of the banking system and align it with India’s next phase of economic expansion, while “safeguarding financial stability, inclusion and consumer protection”.

The proposed committee is expected to examine the evolving role of banks in financing growth, improving credit delivery, adopting technology, strengthening governance standards and managing emerging risks in an increasingly complex financial system.

Sitharaman also laid out a roadmap for non-banking financial companies (NBFCs) for Viksit Bharat, with clear targets for credit disbursement and technology adoption, particularly for those in the public sector.

In order to achieve scale and improve efficiency in the public sector NBFCs, she said, as a first step, it is proposed to restructure the Power Finance Corporation and Rural Electrification Corporation.

“I propose a comprehensive review of the Foreign Exchange Management (Non-debt Instruments) Rules to create a more contemporary, user-friendly framework for foreign investments, consistent with India’s evolving economic priorities,” she said.