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Union finance minister Nirmala Sitharaman on Sunday announced a series of measures aimed at strengthening India’s banking and financial ecosystem, as she underlined the sector’s improved health and outlined the next phase of reforms under the Viksit Bharat vision.In her Budget speech, Sitharaman 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.”
The committee will examine the sector’s structure and readiness as India seeks to scale up growth while protecting consumers and maintaining systemic stability.Highlighting the turnaround in the sector, the finance minister said the Indian banking system today is characterised by strong balance sheets and historic high profitability. She noted that asset quality and coverage have exceeded 98%, reflecting significant improvements following years of balance-sheet clean-up and structural reforms.Sitharaman also laid out a clear vision for non-banking financial companies under the Viksit Bharat framework, with defined targets for credit disbursement and technology adoption.“The vision for NBFCs for Viksit Bharat has been outlined with clear targets for credit disbursement and technology adoption,” she said. To improve scale and operational efficiency in public sector NBFCs, the finance minister proposed restructuring key institutions. “In order to achieve scale and improve efficiency in the public sector NBFCs, as a first step, it is proposed to restructure the Power Finance Corporation and Rural Electrification Corporation,” she said, adding that the move is part of a broader effort to strengthen public sector financial institutions.On the regulatory front, the Budget proposed a comprehensive review of foreign exchange management non-debt instruments rules to create a more contemporary and user-friendly foreign investment framework. Sitharaman said this review is aimed at improving credit efficiency and strengthening financial stability, while making the system more accessible for investors and institutions.The finance minister also proposed introducing a market-making framework with suitable access to funds and derivatives on corporate bond indices, a move expected to deepen the bond market and improve liquidity.The proposed committee comes amid expectations of a broader transformation roadmap for public sector banks, under the Viksit Bharat 2047 framework.The government has indicated that it wants Indian banks, especially PSBs, to emerge as globally competitive institutions, with an emphasis on governance, efficiency and technology adoption.Sitharaman’s remarks on balance-sheet strength and profitability align with recent data showing improved asset quality and sustained earnings across state-run lenders. PSBs had reported a combined net profit of Rs 93,675 crore in the first half of the current fiscal, while gross non-performing assets declined to multi-year lows.