India Constitutes High-Level Committee on Banking Reforms

The Government of India has constituted a High-Level Committee on Banking for Viksit Bharat, signalling a broad review of the country’s banking framework as India prepares for the next phase of economic growth.

The committee will examine the structure and regulation of the banking sector and recommend measures to strengthen the ability of Indian banks to support long-term economic development. Its review is expected to cover commercial banks, Regional Rural Banks and cooperative banks.

A key area will be capital requirements. The committee will examine the long-term capital needs of banks, Development Financial Institutions and NBFCs, along with potential sources of capital and ways to support sustainable credit growth.

The review will also examine the cost of capital for businesses and consider measures that could facilitate greater private-sector investment. This is important as banks will be expected to finance infrastructure, industry and other investment requirements over the coming years.

Technology and cybersecurity will form another important part of the exercise. The committee is expected to develop a roadmap for AI and digital innovation in banking, while also considering safeguards against emerging cyber risks.

The review will also cover the Priority Sector Lending framework and Lead Bank Scheme, with an emphasis on their continued relevance and effectiveness in delivering inclusive credit.

For the banking sector, the committee’s recommendations could have implications for capital management, prudential regulation, digital banking, AI governance, cybersecurity, financial inclusion and credit delivery.

The committee has been given a six-month tenure, making the forthcoming recommendations an important policy development for banks, NBFCs and other financial institutions.

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