New Delhi: Financial services secretary M Nagaraju on Friday said the high-level committee on banking for Viksit Bharat will look into public sector banks’ balance sheet constraints to leverage their capital. The government is likely to announce the terms of reference for the panel.
“This committee is expected to review the banking sector with a focus on making it more effective, more inclusive, and better aligned with India’s growth needs, while maintaining financial stability. We will also likely examine intermediation cost, balance sheet constraints in banks and areas where regulators and institutions can improve the flow of credit,” he said at the ICPP Growth Conference here.
Union finance minister Nirmala Sitharaman had proposed setting up a high-level committee on banking to comprehensively review the banking sector. “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 had said in the Budget speech on February 1, 2026.
On the deepening bond market, Nagaraju also said India needs to develop its corporate bond market so that companies that are not top-rated also get access to capital. “We need to seriously deepen India’s corporate bond market. Banks are not the right vehicle for long-term financing. They have a maturity constraint. They cannot comfortably lend for 10 or 20 years when their deposits are short-term. A well-functioning bond market fills that gap,” he said.
Observing that 90-95 per cent of bond issuances from companies are AA or above rated, Nagaraju said the bulk of the US market is A and BBB rated, whereas there is a gap in the middle tier of the bond market segment in India. Therefore, he said, companies face difficulty in raising funds in long-duration tenors, and long-term capital borrowers must tap the corporate bond market for funds.
“The ability of long-term institutional investors to participate more actively in the corporate bond market will be an important factor in determining how deep and liquid that market can become. The supply side needs to develop better secondary market liquidity, lower transaction friction, and greater coherence in how similar instruments are treated across different regulatory frameworks. The bond, the currency, and the derivatives markets need to work together effectively,” Nagaraju said.
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