- Why in news
- On 30 October 2026, the Finance Ministry constituted a High Level Committee on Banking for Viksit Bharat, which was announced in the Budget speech 2026-27.
- What it is
- This is an expert committee set up by the Government of India to review the banking sector. It is to recommend structural, institutional, regulatory and legislative changes. The aim is a banking system that is globally competitive, inclusive and resilient by 2047.
- Chairman
- Suresh N. Patel, former Central Vigilance Commissioner, chairs the committee.
- Tenure
- The committee has six months to report.
- Member Secretary
- The Joint Secretary (Banking) in the Department of Financial Services is the Member Secretary.
- Priority Sector Lending and Lead Bank Scheme
- The committee will review the relevance, effectiveness and coordination of both for inclusive, data-driven credit delivery.
- Scope of institutions
- The review covers legal and regulatory frameworks for banks, including Regional Rural Banks and Cooperative Banks.
- AI and cyber risk
- It is to prepare a roadmap for AI and digital innovation in banks with safeguards against cyber risks, and a talent strategy.
Don’t confuse with Committee vs regulator: This is an advisory committee set up by the government. It cannot make binding rules like the RBI, which regulates banks under the Banking Regulation Act, 1949.
Don’t confuse with Priority Sector Lending vs Lead Bank Scheme: Priority Sector Lending is an RBI directive requiring banks to lend set shares to priority sectors. The Lead Bank Scheme assigns a bank to coordinate credit and banking in each district.
Laws, judgments and statutory bodies: 30 Prelims questions since 2013 (what the law says, who chairs, legal basis). In Mains, 44 news-triggered questions, most in GS2, asking for provisions and challenges.
Why it matters
- A review of banking norms, capital needs and cost of capital can help credit growth and private investment for Viksit Bharat 2047.
- Covering RRBs, cooperative banks, DFIs and NBFCs looks at the wider financial system, not only commercial banks.
Problems
- Cooperative banks and RRBs sit under mixed regulatory control, so reforms need coordination among the Centre, states and RBI.
- Adopting AI and digital tools raises cyber-risk and workforce skilling concerns.
Way forward
- Consult banks, regulators, states and borrowers, and phase in reforms after the six-month report.
- Pair the legislative changes with stronger supervision and capital support.
Put in your answer
Committee mandate for Mains: Example of reform review on PSL, Lead Bank Scheme, capital needs and AI in banking, to cite in answers on banking reforms.
- 2014Mains GS3 · Q4Rural agricultural credit institutions: cooperatives, constraints, technology use.
- 2015Mains GS2 · Q16Regulatory institutions' independence and autonomy, using recent experiences.
- 2016Mains GS3 · Q3Whether PMJDY necessary for bringing unbanked into institutional finance.
- 2021Prelims Q5Statements on urban cooperative banks' regulation, share issuance, BR Act.
- 2018Prelims Q96Statements on PSB governance, capital infusion, SBI associate mergers.
- 2024Prelims Q49RBI rules on wholly owned foreign bank subsidiaries' capital, board.
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
No practice question for this one; the card may still help an answer. Why: Committee announced in Budget 2026-27 to review banking reforms; report is pending, so no testable outcome yet.
Worth revising until Prelims 2028: most news questions come within two years of the event.