Sun Feb 08 07:41:34 UTC 2026: # India to Establish High-Level Committee on Banking for “Viksit Bharat”

The Story:
Finance Minister Nirmala Sitharaman announced the government’s plan to form a High-Level Committee on Banking for Viksit Bharat to revamp the banking sector and prepare it to meet the financial needs of a developed India. The committee is expected to present a blueprint on how to make banking accessible for funding “Viksit Bharat,” focusing on providing credit and banking facilities to the common person. The move is part of a broader effort to align the financial sector with India’s next phase of growth, while ensuring financial stability, inclusion, and consumer protection.

Key Points:

  • The High-Level Committee on Banking for Viksit Bharat will be formed soon to comprehensively review the banking sector.
  • The committee aims to identify ways to make the banking sector “big enough” to fund “Viksit Bharat.”
  • The Finance Minister emphasized that the focus is not solely on merging public sector banks, but on creating a robust banking system.
  • The Budget for February 1, 2026, proposed restructuring the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) to improve efficiency in the public sector Non-Banking Financial Companies (NBFCs).
  • In March 2019, PFC completed the acquisition of a majority stake in REC Ltd for ₹14,500 crore.
  • The PFC board approved in principle the merger of REC Limited with itself after the announcement in the Budget on February 1, 2026.

Critical Analysis:
The recent announcement to form a high-level committee follows earlier moves to consolidate the power sector’s financial arms (PFC and REC), suggesting a strategic push for larger, more efficient financial institutions within the public sector. This consolidation is likely intended to pool resources, streamline operations, and enhance their capacity to fund large-scale infrastructure projects associated with the “Viksit Bharat” vision. Earlier comments from Nirmala Sitharaman indicate a proactive approach to removing hindrances for India Inc, which further contextualizes these steps as part of a larger economic strategy.

Key Takeaways:

  • The government is prioritizing the development of a strong and scalable banking sector to support India’s growth ambitions.
  • Consolidation of public sector financial institutions appears to be a key strategy.
  • The “Viksit Bharat” initiative is driving significant policy changes in the financial sector.
  • The Finance Minister aims to ensure financial stability, inclusion, and consumer protection alongside growth.
  • The restructuring and potential mergers indicate a move towards greater efficiency and scale in public sector NBFCs.

Impact Analysis:

  • Long-Term Growth: The initiative aims to provide the financial infrastructure necessary for sustained economic growth and development, aligning the banking sector with the long-term goals of “Viksit Bharat”.
  • Financial Sector Stability: By comprehensively reviewing the sector, the committee intends to safeguard financial stability while pursuing growth.
  • Funding for Infrastructure: The formation of mega-lenders is expected to enhance the capacity to finance large-scale infrastructure projects, a crucial element of a developed India.
  • Consumer Protection: The initiative includes a focus on consumer protection, suggesting that the restructuring will be conducted with consideration for the interests of banking customers.
  • Efficiency and Scale: The restructuring of PFC and REC signals a broader push for greater efficiency and scale in public sector NBFCs, potentially leading to more streamlined operations and better resource allocation.

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