New Delhi, Feb 1 (PTI) Finance Minister Nirmala Sitharaman on Sunday announced 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.

Observing that the banking sector today is characterised by strong balance sheets, historic highs in profitability, improved asset quality and coverage exceeding 98 per cent of villages in the country, she said we are well placed to futuristically evaluate the measures needed to continue on the path of reform-led growth of this sector at this juncture.

"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," she said while making the Budget speech in the Lok Sabha.

The vision for NBFCs for Viksit Bharat has been outlined with clear targets for credit disbursement and technology adoption, she said.

In order to achieve scale and improve efficiency in the public sector NBFCs, she said, as a first step, it is proposed to restructure the Power Finance Corporation and Rural Electrification Corporation.

"I propose a comprehensive review of the Foreign Exchange Management (Non-debt Instruments) Rules to create a more contemporary, user-friendly framework for foreign investments, consistent with India's evolving economic priorities," she said.

Interacting with the media, the Finance Minister said that the terms of reference for the high-level panel will be prepared.

"We are looking at a committee to go into the entire expanse of the banking sector so that they come up with recommendations, which help us to plan for banking for 2047. We need to understand what the other steps are that we need to take in the banking area, and based on the recommendations, we will go forward," she said.

Asked about the possibility of a merger of PFC and REC, Sitharaman said there is nothing at this point in time.

Further giving details on the issue, Financial Services Secretary M Nagaraju said there are a large number of aspects relating to the banking requirement.

For example, he said, the credit to the GDP and the commercial credit to the GDP ratio are low.

"All those aspects will be looked at by an expert panel. We will definitely have Terms of Reference and consult all the stakeholders. And the government will take a view on how to lay a strong foundation for 2047 Viksit Bharat," he added. PTI DP BAL

Banking sector: high-level committee set to review structure, NBFC scaling, PFC/REC restructuring and FEMA rule review. A High-Level Committee on Banking for Viksit Bharat will be set up to review the banking sector and recommend reforms to align with growth through 2047 while safeguarding financial stability, inclusion and consumer protection. The policy package includes a vision for NBFCs with credit and technology targets, a proposed restructuring of Power Finance Corporation and Rural Electrification Corporation to improve scale and efficiency, and a comprehensive review of the Foreign Exchange Management (Non-debt Instruments) Rules to modernize the foreign investment framework.