The Centre will soon constitute a high-level committee on banking for Viksit Bharat to prepare a roadmap for building large, globally competitive lenders capable of meeting the financing needs of a developed India, Finance Minister Nirmala Sitharaman said on Saturday.
The proposed panel will examine how India’s banking system can be strengthened to support long-term growth, credit expansion and financial inclusion, as the country moves towards its development goals. Sitharaman said the committee’s mandate would go beyond narrow questions of consolidation and focus on ensuring adequate financing capacity across the economy.
“We want the committee to tell us what kind of things we need to do so that banking is made available for funding Viksit Bharat,” she said.
Responding to a query on whether the exercise would recommend further mergers among public sector banks, the Finance Minister cautioned against limiting the scope of the review. “It is for India’s banking sector to be made big enough, made or primed to take care of Viksit Bharat funding. You have to reach Viksit Bharat destination…it needs money, it needs financing, it needs credit, it needs banking facility to reach the common man,” she said.
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On the timeline for setting up the committee, Sitharaman said it would be constituted “at the earliest”. The proposal was first announced in the Union Budget on February 1, when the Finance Minister said the government would set up a “High Level Committee on Banking for Viksit Bharat” to comprehensively review the sector and align it with India’s next phase of growth, while safeguarding financial stability, inclusion and consumer protection.
Alongside this broader review, the Budget also outlined steps to improve scale and efficiency in public sector non-banking financial companies.
As a first measure, the government proposed restructuring Power Finance Corporation (PFC) and Rural Electrification Corporation (REC), two key lenders in the power sector.
Last week, the PFC board gave in-principle approval for the merger of REC Limited with itself. Both entities are Navratna central public sector enterprises and play a crucial role in financing power generation, transmission and distribution projects across the country.
PFC had acquired a 52.63 per cent stake in REC in March 2019 by transferring Rs 14,500 crore to the government, a move aimed at consolidating state-owned lenders operating in the same space.
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