High-level committee on Indian banking to be formed soon
What's the story
Finance Minister Nirmala Sitharaman has announced that the government will soon form a "High-Level Committee on Banking for Viksit Bharat." The panel's primary objective will be to create a roadmap for developing large lenders capable of meeting the financial requirements of a developed India. Sitharaman stressed that this initiative is crucial to ensure banking facilities are accessible for funding India's journey toward becoming a developed nation.
Strategic planning
Committee to recommend measures to strengthen banking system
The proposed committee will play a vital role in recommending measures to strengthen the banking system and increase credit access. This is all part of the broader vision to support economic growth. Sitharaman said, "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."
Implementation strategy
Committee formation timeline
When asked about the committee's formation timeline, Sitharaman said it would be done "at the earliest." The Finance Minister had first proposed this committee in her Budget speech on February 1. She had said, "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."
Sectoral restructuring
Restructuring of PFC and REC proposed in Budget
As part of the initial steps to improve efficiency in public sector non-banking financial companies (NBFCs), Sitharaman's Budget also proposed restructuring the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC). The two entities play an important role in funding power generation, transmission, and distribution projects. Last week, PFC's board approved the in-principle merger with REC Limited after an announcement made during the Budget presentation.