New Delhi: The government is set to constitute a high-level committee on banking sector reforms soon, Finance Minister Nirmala Sitharaman announced on Monday during the first day of the two-day PSB Confluence 2026 in New Delhi.
According to a Finance Ministry source, the committee could be constituted this month.
The proposed panel will examine the evolving role of India’s banking sector and recommend measures to align it with the country’s long-term economic priorities, particularly the government’s goal of building a Viksit Bharat by 2047.
Committee Announced in Union Budget 2026-27
The proposal for a high-level committee on the banking sector was first announced by Sitharaman in the Union Budget 2026-27.
The government had proposed setting up the panel to review the banking sector and assess how it can better support India’s economic transformation.
Although the announcement was made in the Budget, the committee had not yet been formally constituted.
Sitharaman’s latest announcement indicates that the government is now moving towards setting up the panel, with its constitution expected shortly.
Read also: ONGC Wins US OFAC Licence to Resume Venezuela Operations, Eyes Higher Oil Production
Banking Sector’s Role in Viksit Bharat 2047
The Finance Minister said the committee would examine the role of banks in India’s journey towards becoming a developed economy.
The exercise will be linked to the broader Viksit Bharat 2047 vision, under which the government aims to transform India into a developed nation by the time the country completes 100 years of independence.
Sitharaman noted that 2047 is not far away, underlining the need for the banking system to prepare for the country’s long-term economic requirements.
The panel is therefore expected to look at how banks can support India’s growth ambitions, including the financing requirements of a rapidly expanding economy.
Government Promises Swift Action on Committee’s Recommendations
Sitharaman also made it clear that the government would not keep the recommendations pending once the committee submits its report.
She said that as soon as the panel submits its recommendations, the government will act swiftly on them.
The assurance comes at a time when India’s banking sector has undergone significant changes in recent years, including improvements in asset quality, stronger balance sheets and greater profitability among public sector banks.
Public Sector Banks Record ₹1.98 Lakh Crore Profit
The government’s decision to pursue further reforms comes against the backdrop of a significant improvement in the financial performance of Public Sector Banks (PSBs).
During FY 2025-26, public sector banks collectively recorded a net profit of more than ₹1.98 lakh crore, their highest-ever combined annual profit.
The improvement in profitability and asset quality has strengthened the financial position of government-owned banks and created a stronger base for the next phase of banking reforms.
The government is now looking at how this improved financial position can be leveraged to support India’s broader economic ambitions.
Bank NPAs at Lowest Level
Sitharaman also highlighted the improvement in the asset quality of banks, with Non-Performing Assets (NPAs) at their lowest level.
A decline in NPAs is considered a positive indicator for the banking system because it reflects an improvement in the quality of loans and reduces the pressure created by bad debts.
The improvement follows several years of efforts to strengthen bank balance sheets, recover stressed loans and improve credit discipline.
What Are Non-Performing Assets?
Non-Performing Assets (NPAs) are loans or advances where the borrower fails to make payments of principal or interest for a specified period, generally 90 days.
A high level of NPAs can weaken a bank’s financial position because banks have to make provisions against loans that may not be recovered.
Conversely, a sustained reduction in NPAs indicates improving asset quality and can strengthen banks’ ability to lend to businesses and individuals.
Why the Banking Reforms Panel Matters
Banks will have a crucial role to play in financing India’s economic expansion as the country works towards the Viksit Bharat 2047 target.
A stronger banking system can help mobilise savings, expand credit availability, finance infrastructure and industrial projects, support businesses and improve financial inclusion.
The proposed committee is expected to assess whether India’s banking architecture is adequately equipped to meet these requirements over the coming decades.
With PSBs now reporting record profits and significantly improved asset quality, the government is seeking to use this stronger foundation to undertake the next phase of reforms.
What Is Viksit Bharat 2047?
Viksit Bharat 2047 is the government’s vision of transforming India into a developed country by 2047, the centenary year of India’s independence.
The goal encompasses economic growth, infrastructure development, social progress, technological advancement and stronger institutions.
The banking sector is expected to be an important component of this transformation because of its role in mobilising capital and providing credit for economic activity.
Key Takeaways
- The government is expected to constitute a high-level banking reforms committee this month.
- The panel was first proposed in the Union Budget 2026-27.
- It will examine the role of banks in achieving the Viksit Bharat 2047 vision.
- Finance Minister Nirmala Sitharaman has promised swift action on the panel’s recommendations.
- Public Sector Banks recorded a combined net profit of over ₹1.98 lakh crore in FY26.
- Bank NPAs have fallen to their lowest level, indicating improved asset quality.
Read also: India’s Nuclear Push: BARC, NPCIL Unveil DPR for Indigenous 300 MWe BSMR-300 Reactor
