The Government’s constitution of a High-Level Committee on Banking for Viksit Bharat fulfils a commitment in the Finance Minister’s 2026-27 Budget speech. Its mandate is to recommend reforms that make Indian banking globally competitive, inclusive and resilient by 2047.

Yet there is déjà vu.

India's ambition to create banks of global stature is hardly new; what is remarkable is the global stature the ambition has acquired, while the banks are still waiting.

India has seen successive exercises, from the Narasimham committees to the Raghuram Rajan committee. Yet the tension between regulatory control and commercial freedom, public obligations and efficiency, and institutional caution and entrepreneurial risk-taking remains unresolved. Have recommendations translated into change?

A fundamental question is absent from the terms: will it examine banking as part of the wider financial system, or merely reform individual institutions?

This is important as banks, NBFCs, mutual funds, insurers, pension funds, capital markets, clearing corporations and payment systems are connected through funding, liquidity, collateral, common exposures and technology infrastructure.

Risks cross these boundaries faster than regulatory responses.

An intervention defensible in one domain can have unintended consequences elsewhere. Restricting one funding channel may redirect flows; a liquidity intervention may alter market behaviour; constraints on one intermediary may transfer risks to another. The cumulative outcome may differ from the intention.

Market-based finance, derivatives and concentrated technology infrastructure have made interconnectedness central to stability. Global crises show that institutions can appear sound even as vulnerabilities accumulate across the system. Individually prudent institutions do not automatically make a resilient system.

Regulatory Silos
India’s regulatory architecture remains organised substantially around institutional boundaries. But coordination is not continuous, nor is there an integrated assessment of the cumulative consequences of regulatory decisions. Who examines whether individually reasonable interventions by different regulators, taken together, create distortions, regulatory arbitrage or concentrations of risk?

This may matter more than institution-specific prescriptions. Unless the new committee understands the interconnectedness of the financial system, its recommendations may amount to little more than rearranging the furniture.

Its composition makes this question relevant. The chairperson need not be judged merely by his vigilance background; he has substantial banking experience. The others bring banking and regulatory expertise.

But can a committee drawn largely from the existing framework challenge its assumptions? Experience is valuable; intellectual diversity and willingness to question established thinking are equally important.

The first two terms combine adapting global best practices to Indian banking with reviewing the regulatory framework for banks, including Regional Rural Banks and cooperative banks.

We aspire to build globally competitive banks with an Indian flavour. Accommodating developmental and financial inclusion needs is legitimate. Preserving institutional fragmentation, political interference and restrictions in the name of Indian conditions is not.

The ambition for globally competitive banks requires more than scale. It calls for risk management, technology, governance, autonomy and efficient capital allocation. Regulation must distinguish prudent supervision from excessive prescription. Otherwise, global banks could remain a will-o’-the-wisp.

The third and fourth terms of reference, on long-term capital requirements of banks, development financial institutions and NBFCs, and differences in businesses’ cost of capital, are relevant. But the issue is not simply how much capital the system needs. It is whether the architecture can allocate it efficiently, and whether banks and non-bank intermediaries are assessed as parts of the same ecosystem.

The fifth term, covering AI, digital innovation, cybersecurity and talent, may be the most consequential. AI will change credit assessment, fraud detection, customer service and risk management. Cybersecurity, data governance, algorithmic accountability and technology concentration will become systemic concerns. Yet no technology specialist is explicitly identified on the committee. Expertise in technology architecture, AI or cybersecurity should be integral to an exercise preparing banking for the next two decades. Technology cannot be an add-on to conventional banking expertise.

Reviewing Priority Sector Lending and the Lead Bank Scheme is familiar territory. Their objectives remain relevant; financial inclusion cannot be left to market forces. But priority-sector obligations can become exercises in meeting numerical targets rather than ensuring productive credit.

Can the framework become outcome-oriented, measuring additionality, credit quality and developmental impact? Can directed credit and its cost benefits be fundamentally reconfigured in a political economy where it has acquired considerable significance?

Reforming Autonomy
Another omission is regulation, governance and managerial autonomy. They can’t be submerged into all-purpose “Make recommendations on any other matter referred to the Committee by the Government of India”.

Banks are expected to operate commercially, compete and innovate, yet their freedom is circumscribed by prescriptions, ownership considerations and fear of subsequent scrutiny. Avoiding a decision can become safer than taking a commercially justified risk. Accountability is indispensable but cannot substitute for sound commercial judgement.

The committee has six months. Success should be measured not by the number of recommendations, but by whether it identifies the contradictions holding banking back. Reform cannot be undertaken in isolation. Without understanding interconnections, transmission channels and cumulative policy consequences, even well-intentioned recommendations may be inconsequential or counterproductive.

Plus ça change, plus c’est la même chose — the more things change, the more they remain the same.

The committee can prove this wrong. That requires more than reviewing banks and rewriting regulations; it requires questioning the architecture and philosophy of financial-sector governance. Otherwise, we may end up with another impressive report, followed by another committee to examine why its recommendations were not implemented.