New Delhi – The Indian government is set to constitute a high-level banking committee, as announced in the Union Budget 2026–27, before the upcoming Monsoon Session of Parliament. This pivotal committee is tasked with charting a long-term strategic roadmap for India's diverse banking sector.
Mandate and Objectives
Finance Minister Nirmala Sitharaman initially proposed the committee during her Budget speech, emphasizing its role in providing a dedicated mechanism to thoroughly examine structural and policy issues affecting both public and private sector banks. Officials indicate the primary objective is to develop a robust, long-term policy framework aligned with the government's 'Viksit Bharat' vision, thereby strengthening banks' capacity to support India's ambitious growth trajectory.
While the committee's mandate will encompass both public and private institutions, discussions are expected to focus more extensively on public sector banks.
Formation and Potential Leadership
According to government sources, the Department of Financial Services (DFS) has already finalized the committee's terms of reference in consultation with the Prime Minister's Office (PMO). The proposal now awaits formal approval from the PMO, which will officially constitute the committee and appoint its chairperson.
Former DFS Secretary M. Nagaraju, who retired on May 30, is reportedly among the frontrunners to lead the panel, although a final decision remains pending.
Key Areas of Examination
The committee's agenda is broad and critical, expected to delve into several key areas vital for the future of Indian banking. These include:
- Banking sector consolidation strategies
- Reforms in governance across banks
- Accelerating digital transformation initiatives
- Enhancing financial inclusion efforts
- Measures to boost the global competitiveness of Indian banks
Sources have clarified that a separate proposal concerning raising the foreign investment cap in public sector banks to 49% is being examined independently and is not anticipated to form a significant part of this committee's terms of reference.