PIB TrackerFormer CVC to lead a six-month review of banking
The Centre has constituted the High Level Committee on Banking for Viksit Bharat announced in the 2026-27 Budget - chaired by former CVC Suresh N. Patel with a serving and a former RBI Deputy Governor - to recommend structural, regulatory and legislative reforms within six months.
What happened
- The Government constituted the High Level Committee on Banking for Viksit Bharat to review India's banking sector and recommend structural, institutional, regulatory and legislative reforms for a globally competitive, financially inclusive and resilient system by 2047.
- Finance Minister Nirmala Sitharaman had announced the Committee in her Budget speech for 2026-27.
- Suresh N. Patel, former Central Vigilance Commissioner, is Chairman; the members are Shirish Chandra Murmu (Deputy Governor, RBI), Padmaja Chunduru (former MD & CEO, Indian Bank) and N.S. Vishwanathan (former Deputy Governor, RBI). The Joint Secretary (Banking), DFS is Member Secretary; the tenure is six months.
- The terms of reference include benchmarking prudential norms against global best practice, reviewing the legal frameworks for banks including Regional Rural Banks and cooperative banks, and assessing the long-term capital requirements of banks, DFIs and NBFCs.
- It will also examine differences in the cost of capital for business, prepare a roadmap for AI and digital innovation with cyber safeguards and a talent strategy, and review the Priority Sector Lending framework and the Lead Bank Scheme.
For Prelims
- Narasimham Committees: the first (1991) studied the efficiency of the financial system and argued for bank autonomy; the second (1998) focused on capital adequacy, bank mergers and banking legislation. Together they set the course of post-1991 banking reform.
- P.J. Nayak Committee (2014): set up by the RBI to review the governance of bank boards; it recommended repealing the bank nationalisation Acts and creating a Bank Investment Company to hold government equity, with a Bank Boards Bureau as an interim step.
- Priority Sector Lending: domestic scheduled commercial banks must lend 40 per cent of Adjusted Net Bank Credit (ANBC), or of the credit equivalent of off-balance-sheet exposure if higher, to priority sectors. The target was 33.3 per cent by 1979 and 40 per cent from 1985.
- Lead Bank Scheme: introduced by the RBI in December 1969 on the 'area approach' of the Gadgil study group; each district has a lead bank to coordinate credit delivery. The Committee is to test both PSL and the LBS for 'relevance, effectiveness and coordination'.
- Regional Rural Banks: set up under the Regional Rural Banks Act, 1976. The fourth round of amalgamation ('One State, One RRB'), under Section 23A, cut their number from 43 to 28 from 1 May 2025.
- Central Vigilance Commissioner: heads the CVC, a statutory body under the CVC Act, 2003, for four years or until 65. Suresh N. Patel joined as a Vigilance Commissioner in 2020, was acting CVC from June 2021 and CVC from August 2022.
- RBI Deputy Governors: up to four, appointed by the Centre under the RBI Act, 1934. Shirish Chandra Murmu took office on 9 October 2025 for three years - a serving regulator on a government review panel.
- AI in finance: the RBI's FREE-AI committee report (13 August 2025) set out seven 'sutras' and 26 recommendations for responsible AI in the financial sector. The new Committee's AI and cyber remit overlaps that framework.
For UPSC: HLC on Banking for Viksit Bharat (Budget 2026-27): chair Suresh N. Patel (ex-CVC); members S.C. Murmu, Padmaja Chunduru, N.S. Vishwanathan; 6 months; reviews PSL, Lead Bank Scheme, RRBs.
What it is NOT: The release sets no date for the report beyond the six-month tenure, does not say whether it will be made public, and gives no data on the sector under review - no capital shortfall, no cost-of-capital gap, no priority-sector achievement figures. It does not mention public sector bank consolidation or ownership, which the Finance Minister said in February the Committee would look at, nor how its work will relate to the RBI's own regulatory reviews, given that a serving Deputy Governor sits on it.
For Mains
Syllabus: GS3.1 · GS3.2 · Linkage L1
Anchor
Each generation of Indian banking reform has begun with a committee: Narasimham in 1991 and 1998, Nayak in 2014. The High Level Committee on Banking for Viksit Bharat is the first set up against a 2047 horizon, with six months to say what the system must become.
Substantiation (data)
Chaired by former CVC Suresh N. Patel, with a serving and a former RBI Deputy Governor and a former Indian Bank chief, it must cover prudential norms, RRBs and cooperative banks, the capital needs of banks, DFIs and NBFCs, cost of capital, AI, and the 40 per cent PSL regime.
Position
A broad remit is justified. Credit for a developed economy will come from banks, DFIs and NBFCs together, and their capital, regulation and cost of funds cannot sensibly be reformed one at a time.
Counterpoint
Breadth risks generality in six months. The panel has no private-bank or fintech member, and the questions that weigh most on efficiency - ownership and consolidation of public sector banks - are not named in the terms of reference.
Way forward
Publish the report and the Government's response; separate quick regulatory fixes from legislative ones; and test PSL and the Lead Bank Scheme against outcome data on credit reach rather than on target compliance.
Conclusion
The Narasimham reports outlasted the governments that commissioned them because they were specific. This Committee will be judged the same way.
Deploys into: Banking sector reforms · Financial inclusion and priority sector lending · Regulatory institutions (RBI, DFS) · Credit for Viksit Bharat 2047
Ministry of Finance · 2026-10-30 · PRID 2330598 · PIB source ↗