Following the announcement in the Union Budget 2026–27, the much-awaited High-Level Committee on Banking for Viksit Bharat (HLBC) has been formed, with Suresh N. Patel, former Central Vigilance Commissioner, as chairman, and three experts: Shirish Chandra Murmu, Deputy Governor of the Reserve Bank of India (RBI); Padmaja Chunduru, former managing director and chief executive officer of Indian Bank; and N. S. Vishwanathan, former RBI Deputy Governor, as members.

The committee represents the third comprehensive, government-appointed apex banking reforms committee tasked with designing a systemic, multi-decade structural overhaul of the Indian banking system, building directly on the legacy of the Narasimham Committees.

It will build on the foundation of progressive bank reforms initiated by the Narasimham Committee I in 1991, which focused on ‘deregulation and liberalisation’, and the Narasimham Committee II, which focused on ‘systemic strengthening and consolidation’, though several interim committees also contributed.

Viksit Bharat Committee
The committee has a broad mandate for structural banking reform aimed at rethinking the entire banking architecture. It is tasked with designing the banking structure needed to scale credit as the economy moves towards developed-nation status by 2047, while addressing structural capacity, regulatory friction, and long-term risk absorption.

 Its terms of reference focus on the following strategic issues:

• Benchmarking against global best practices and enhancing competitiveness

• Long-term capital requirements and credit growth

• Cost of capital and private investment

• Review of legal and regulatory frameworks

• Technology, artificial intelligence roadmap and cybersecurity safeguards

• Priority sector lending (PSL) and financial inclusion architecture

• Human capital and future-ready workforce

Size and Scale
The committee has to work towards a banking system that gradually aligns in size and scale with the potential growth of GDP. The entire infrastructure has to cope with both risks and growth potential. 

With GDP stated to be close to $4 trillion now, the total balance sheet of the banking system is around ₹330–350 trillion, working out to an assets-to-GDP ratio of 100% and a bank credit-to-GDP ratio of 64–65%. 

When GDP reaches $30 trillion, bank assets are likely to reach ₹3,000 trillion, a more than eightfold rise. This will require capacity building in structure, human competency, risk management architecture, and internal controls well calibrated to the impending scale and size. Regulatory and compliance challenges will shift to align with the new scale and complexity.

Beyond extrapolating data, the committee must consider the likely increase in business and risks, drawing on the experience of developed economies. 

As economies mature to high-income status (Viksit Bharat), financial deepening typically outpaces headline GDP growth. 

For example, in developed economies like Japan, the eurozone, China and the UK, banking assets-to-GDP ratios often exceed normal distribution patterns due to financial intermediation, complex derivatives, cross-border banking, and secondary market liquidity. 

Growth may not follow simple extrapolation models.

Institutional Framework
While assessing bank size in terms of lending capacity, capital adequacy, and capacity to mitigate integrated risks is important, the number and diversity of banks and non-banks in the financial markets are equally important for creating vibrancy. 

For example, the United States has over 4,000 commercial banks, 12 of which are among the top 100 global banks, supporting a GDP of $30 trillion.

China has 160 commercial banks and 21 of which are among the top 100 global banks. More than 3,800 rural commercial banks, rural credit cooperatives, and village banks support them. Germany has 230–240 commercial banks, four of which are among the top 100 banks. This banking network is supported by 1,300 credit and microfinance institutions.

Japan has 150 banks, eight of which are among the top 100 global banks, supported by more than 500 credit cooperative banks. The UK has 340 banking institutions, six of which are among the top 100 global banks. 

By comparison, India has about 90 commercial banks, two of which are among the top 100 global banks, and its credit-to-GDP ratio is low at 64%. 

These data clearly indicate that India has far fewer banks than major economies.

A strong banking presence is critical for financial inclusion, competition, and an effective customer grievance redressal system that serves the growing number of young bank customers. Growth through consolidation could have long-term limits; efficient smaller institutions could enable faster outreach and wider choices for users.

Risk Architecture
Although banks and non-banks are working hard to strengthen risk management capacity following the RBI’s move to risk-based supervision (RBS), risk management is broadly considered a corporate-sector function and the responsibility of the second line of defence. 

Given the growing domain, collateral, and interconnected risks, the committee should create a systemic structure at the bank level to ensure every line of business has its own inclusive system of three lines of defence under the hub-and-spoke model, so ring-fencing occurs at the unit level and risk sensitivity is increased at the first line of defence. Under the expected credit loss (ECL) and Basel 3.1 frameworks, aligning each line of business’s risk weights, risk assessment, capital optimisation, and risk mitigation strategies is critical for sustainability and achieving growth potential.

The formation of the HLBC gives every stakeholder hope of harnessing the full growth potential and fulfilling the goals of Viksit Bharat while managing the associated risks.

Members with strong regulatory knowledge and operational expertise provide confidence that recommendations will be well sequenced and implementable, with adequate timelines and a transition period. 

There should be room to test some measures in a sandbox environment before implementation, to ensure the assumptions underlying each measure are sound.

Scaling up banks’ capacity to manage risks and enhance capital levels will require a multipronged effort by all stakeholders. Designing next-generation banking reforms to deliver a digitally driven banking system, reinforced with embedded cybersecurity and well poised to serve the growing economy, is a challenging and ambitious undertaking. 

In this context, the learned committee is expected to balance stakeholders' hopes and aspirations.