The government will soon set up a high-level committee to review India’s banking sector and recommend reforms aimed.
At creating large, globally competitive lenders capable of financing a developed India, Finance Minister Nirmala Sitharaman has said.
In an interview with PTI Videos, Sitharaman said the proposed panel would focus on preparing the banking system to meet the funding needs of Viksit Bharat. “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.
Asked whether the panel would examine mergers among public sector banks, the finance minister urged against narrowing the scope of the exercise. “The objective is to make India’s banking sector big enough — primed to finance Viksit Bharat. Reaching that destination needs money, financing, credit and banking facilities that reach the common man,” she said.
On the timeline, Sitharaman indicated that the government would move quickly. “We will do it at the earliest,” she said.
The proposal was formally announced in the Union Budget on February 1. “I propose setting 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,” Sitharaman said in her Budget speech.
As part of broader efforts to improve scale and efficiency in public sector financial institutions, the Budget also proposed restructuring the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC). Responding to questions on a possible merger between the two, Sitharaman said discussions were already underway. “A lot of work has happened in the ministry concerned. They have come up with this expectation. Let’s see how they play it out,” she said.
REC has been a subsidiary of PFC since March 2019, when PFC acquired a 52.63 per cent stake from the government for around ₹14,500 crore, gaining management control. Both entities are Navratna central public sector enterprises and play a key role in financing power generation, transmission and distribution projects.
Last week, the PFC board gave in-principle approval for the merger of REC with itself following the Budget announcement. The government has positioned the move as part of a broader consolidation strategy in the financial sector, even as the proposed high-level committee prepares to undertake a comprehensive review of banking reforms needed for India’s next phase of growth.
Comments are closed.