# Centre sets up High-Level Committee on Banking for Viksit Bharat under Suresh N. Patel

URL: https://upsc.help/current-affairs/2026-10-30/banking-committee-viksit-bharat-patel/
Date: 30 October 2026 (2026-10-30)
Source: PIB, Government release
UPSC papers: GS3
Publisher: upsc.help (Pratidin), free and open-source UPSC Civil Services current affairs. Not affiliated with UPSC. Every fact was checked against the source reports by a separate review before publishing.

**In one line:** The Centre has set up a four-member committee under Suresh N. Patel to review India's banking sector for the needs of a developed economy.

On 30 October 2026, the Ministry of Finance announced the constitution of the High-Level Committee on Banking for Viksit Bharat, with a tenure of six months. It is chaired by Suresh N. Patel, former Central Vigilance Commissioner. Its members are Shirish Chandra Murmu, Deputy Governor of the Reserve Bank of India (RBI); Padmaja Chundru, former Managing Director and CEO of Indian Bank; and N.S. Vishwanathan, former Deputy Governor of the RBI. The Joint Secretary (Banking) in the Department of Financial Services is Member Secretary. The committee fulfils an announcement in the Union Budget 2026-27, presented on 1 February 2026, when Finance Minister Nirmala Sitharaman said: "I propose setting up a High-Level Committee on Banking for Viksit Bharat to comprehensively review the sector." She described it as a way to align the sector with India's next phase of growth while safeguarding financial stability, inclusion and consumer protection.

The terms of reference are wide. The committee is to assess banking practices and prudential norms against global best practice and propose a roadmap for globally competitive banks; review the regulatory and legal framework for banks, including regional rural banks and cooperative banks, to improve efficiency and ease of doing business; assess the long-term capital needs of banks, development financial institutions and non-banking financial companies (NBFCs) and recommend funding sources to support credit growth; examine differences in the cost of capital for businesses and suggest ways to boost private investment; prepare a roadmap for artificial intelligence and digital innovation in banks with cyber-risk safeguards and talent strategies; and review the Priority Sector Lending (PSL) framework and the Lead Bank Scheme for their relevance and effectiveness. It may also take up any other matter the government assigns.

The review comes when, as the Budget speech put it, banks have strong balance sheets, record profits, better asset quality and outreach to over 98% of villages. Two of its tasks pull in different directions. PSL rules require domestic commercial banks to lend 40% of their adjusted net bank credit to sectors such as agriculture (18%), micro enterprises (7.5%) and weaker sections (12%), and the Lead Bank Scheme, launched by the RBI in December 1969, makes one bank in each district responsible for coordinating credit. These tools serve inclusion; a push for globally competitive banks stresses efficiency, capital and returns. The committee's challenge is to modernise both without weakening either. Its brief on AI and cyber-risk also comes as the Supreme Court presses banks to stop digital frauds.

## Prelims facts

- The High-Level Committee on Banking for Viksit Bharat, constituted on 30 October 2026, is chaired by former Central Vigilance Commissioner Suresh N. Patel and has a six-month tenure.
- Its members include RBI Deputy Governor Shirish Chandra Murmu, former RBI Deputy Governor N.S. Vishwanathan and former Indian Bank MD and CEO Padmaja Chundru.
- The committee was announced in the Union Budget 2026-27 on 1 February 2026.
- Its terms of reference include reviewing the Priority Sector Lending framework and the Lead Bank Scheme, and a roadmap for AI in banking.
- Domestic commercial banks must lend 40% of adjusted net bank credit to priority sectors, including 18% to agriculture.

## Quick recall

- **Who chairs the High-Level Committee on Banking for Viksit Bharat?** Suresh N. Patel, former Central Vigilance Commissioner.
- **Tenure of the committee** Six months.
- **When was the committee announced?** In the Union Budget 2026-27, presented on 1 February 2026.
- **Which serving RBI Deputy Governor is a member?** Shirish Chandra Murmu.
- **Who is the Member Secretary?** Joint Secretary (Banking), Department of Financial Services.
- **Overall PSL target for domestic commercial banks** 40% of Adjusted Net Bank Credit.
- **When did the RBI launch the Lead Bank Scheme?** December 1969.
- **Which committee recommended the district as the unit of credit planning under the Lead Bank Scheme?** The Nariman Committee (1969), after the Gadgil Study Group.

## Prelims practice question

With reference to the Priority Sector Lending (PSL) norms for domestic scheduled commercial banks, consider the following statements:
1. The overall PSL target is 40% of Adjusted Net Bank Credit (ANBC).
2. The sub-target for agriculture is 18% of ANBC.
3. The overall PSL target for Regional Rural Banks is lower than that for domestic commercial banks.
Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: (a) 1 and 2 only. Statements 1 and 2 are correct. Statement 3 is incorrect: Regional Rural Banks have a higher overall PSL target of 75% of ANBC, and Small Finance Banks 60%.

## UPSC previous-year questions this connects to

- UPSC Mains 2022, GS3: Is inclusive growth possible under market economy? State the significance of financial inclusion in achieving economic growth in India. (https://upsc.help/pyq/q163-inclusive-growth-possible-under-market-economy-state/)
  How to use this story in the answer: Show that a market-led banking system still relies on directed tools for inclusion, and that the new committee must reconcile competitiveness with them.
- UPSC Mains 2026, GS3: Examine the view that financial inclusion is an integral part of social and economic inclusion in a country like India. Also throw light on the usefulness of the R.B.I.'s Financial Inclusion Index. (https://upsc.help/pyq/q162-view-financial-inclusion-integral-part-social-economic/)
  How to use this story in the answer: Open with India's banking outreach and note that the government is now reviewing the tools that delivered it.
- UPSC Prelims 2014, Prelims: What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas? 1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages. 2. It enables the beneficiaries in the rural areas to make deposits and withdrawals. (https://upsc.help/pyq/q168-facility-facilities-beneficiaries-can-get-services-business/)

## Mains practice question

The High-Level Committee on Banking for Viksit Bharat has been asked both to make Indian banks globally competitive and to review priority sector lending. Discuss the reforms India's banking sector needs to finance growth while staying inclusive. (250 words)

### Model answer

On 30 October 2026, the Centre constituted the High-Level Committee on Banking for Viksit Bharat under Suresh N. Patel, with six months to review the sector, as announced in the Union Budget 2026-27.

## Why a review now
- **Strong base:** banks report strong balance sheets, record profits and outreach to over 98% of villages (Budget 2026-27).
- **Growth needs capital:** long-term credit for infrastructure and industry needs deeper funding for banks, NBFCs and development financial institutions.
- **New risks:** AI, digital banking and cyber fraud.

## Reforms for competitiveness
- **Prudential norms:** align with global best practice while keeping stability.
- **Capital:** assess long-term capital needs and new funding sources for credit growth.
- **Cost of capital:** narrow differences in borrowing costs to revive private investment.
- **Regulatory simplification:** for commercial, regional rural and cooperative banks.
- **Technology:** AI roadmap with cyber-risk safeguards and skilled staff.

## Keeping it inclusive
- **Priority Sector Lending:** 40% of ANBC for domestic banks, with 18% for agriculture and 7.5% for micro enterprises; review to target credit gaps better.
- **Lead Bank Scheme (1969):** refresh district credit planning.
- **Consumer protection:** stronger defences against digital fraud.

## Risks to manage
- Chasing scale and returns may crowd out small borrowers.
- Diluting directed lending without alternatives could hurt farmers and MSMEs.
- Six months is short for a sector-wide review.

The committee's test is to build banks that can finance a developed India without leaving behind the borrowers that inclusion policies were designed to reach.

## The basics

## Why this matters

Banks turn savings into loans. How well they do it decides whether farmers get seed money, whether factories can expand and whether roads get built. India's banks are in better health than they have been in years, and the government now wants a full review of what they must become for a developed economy by 2047.

## Two goals that pull apart

The committee is asked to make banks globally competitive. It is also asked to review the tools that make banks lend where they might not by choice: Priority Sector Lending and the Lead Bank Scheme. Directed lending supports inclusion but can lower returns; competitiveness rewards scale and efficiency.

## Priority sector targets

Domestic commercial banks must lend 40% of their Adjusted Net Bank Credit to priority sectors. Banks that fall short can buy Priority Sector Lending Certificates from banks with a surplus.

## Where long-term money comes from

Big projects need loans for 15 or 20 years, while bank deposits are mostly short term. That mismatch is why the brief also covers Development financial institutions and NBFCs, which can specialise in long-term lending.

## Sources

- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2330631
- https://www.livelawbiz.com/top-stories/budget-2026-27-centre-set-up-high-level-committee-to-review-the-banking-sector-521403
- https://www.newsonair.gov.in/govt-to-set-up-high-level-committee-to-review-the-banking-sector
- https://www.shankariasparliament.com/current-affairs/priority-sector-lending-psl
- https://www.gktoday.in/gk/lead-bank-scheme/