The Centre is set to announce a high-powered committee to examine the next phase of banking sector reforms and define how banks can better support India’s ambition of becoming a developed economy by 2047. Finance Minister Nirmala Sitharaman said the panel would be constituted soon, with the ongoing discussions among public sector banks (PSBs) and public financial institutions expected to provide important inputs for its work.
The proposed High-Level Committee on Banking for Viksit Bharat was first announced in the Union Budget 2026-27. The government had said the committee would undertake a comprehensive review of the financial sector and suggest measures to align it with India’s next phase of growth, while keeping financial stability, inclusion and consumer protection in focus.
Sitharaman made the latest announcement while addressing the PSB Confluence 2026 in New Delhi on August 17. The two-day meeting, organised by the Department of Financial Services under the Ministry of Finance, brought together senior executives of public sector banks, public financial institutions, government officials and industry experts to discuss the changing requirements of the banking and financial system.
The timing of the proposed banking reforms is significant. Indian banks have emerged from a prolonged period of balance-sheet stress with much healthier asset quality. Public sector banks reported an aggregate net profit of ₹1.98 lakh crore in financial year 2025-26, their highest ever, while their gross non-performing asset ratio fell to 1.93% and net NPA ratio declined to 0.39% as of March 31, 2026. Their total business also rose to ₹283.3 lakh crore, while gross advances increased 15.7% year-on-year to ₹127 lakh crore.
Sitharaman said the historically low level of non-performing assets (NPAs) has put the banking industry in a stronger position to undertake the next phase of reforms. The focus is therefore shifting from repairing bank balance sheets to preparing lenders for the financing needs of a larger and more complex economy.
The PSB Confluence is expected to play an important role in that transition. The first day of the meeting focused on four areas: deposit mobilisation, banking for youth, supporting the investment cycle and opportunities arising from global capability centres, or GCCs. The discussions were aimed at identifying practical measures that can be implemented across public sector banks and financial institutions.
Deposit mobilisation has emerged as an important concern as banks seek to support faster credit growth while maintaining adequate funding. The discussions examined ways to deepen customer engagement and strengthen the deposit base. For banks, attracting stable deposits remains critical because sustained lending growth requires a dependable source of funds.
The government also wants the banking system to respond better to the financial needs of younger Indians. Sitharaman pointed out that people aged between 15 and 29 account for 29% of India’s population. The confluence therefore examined ways to make banking products and services more relevant to young customers, including areas such as education finance, entrepreneurship and career opportunities.
Participants also explored the possibility of using Mera Yuva Bharat (MY Bharat) to strengthen the connection between young people and the formal financial system. The platform has more than 26 million registered users and could provide banks with a wider avenue to reach potential customers and improve financial awareness among youth.
Another major area under discussion was the investment cycle. Banks and financial institutions will have to play a larger role in financing infrastructure, businesses and new investment opportunities as economic activity expands. The confluence looked at strengthening institutional capabilities and developing financing solutions that can respond to changing investment requirements.
The growing global capability centre (GCC) ecosystem was another focus. With multinational companies expanding their technology, research and service operations in India, public sector banks and financial institutions are being encouraged to identify new opportunities emerging from this sector.
The second day of the confluence is focused on agriculture and horticulture value-chain infrastructure, priority sector lending and rethinking the credit card business. The government expects the discussions across all seven themes to result in actionable strategies and innovative solutions that can eventually feed into the work of the proposed banking reforms committee.
The government is also looking for more direct participation from banking leaders in shaping the reform agenda. Sitharaman has urged bankers to put forward concrete recommendations rather than broad suggestions, with the objective of ensuring that the eventual reforms are practical and capable of being implemented.
For public sector banks, the proposed panel comes at a relatively stronger point in their financial performance. Years of efforts to improve governance, recover stressed assets, strengthen capital positions and tighten credit discipline have improved their resilience. The challenge now is to ensure that renewed lending growth does not recreate the asset-quality problems seen during earlier credit cycles.
The proposed committee is therefore likely to look beyond immediate banking issues and examine the broader role of financial institutions in India’s long-term economic transformation. Its recommendations could influence how banks approach credit, deposits, financial inclusion, technology, risk management and emerging sectors.
With less than two decades left until 2047, the government sees the banking system as a key pillar of the Viksit Bharat agenda. The immediate priority is to convert the improved health of Indian banks into a stronger foundation for sustainable credit growth, wider financial inclusion and greater economic opportunity.
The announcement signals that the next phase of banking reform will not simply be about fixing weaknesses. It will be about building lenders capable of supporting a much larger economy while maintaining stability, consumer confidence and responsible lending standards.