It’s Monday morning, February 2, 2026, and while the markets are still processing the “STT shock” from yesterday’s Budget, the financial sector just got a massive homework assignment. Finance Minister Nirmala Sitharaman has officially announced a “High-Level Committee on Banking for Viksit Bharat.” The thing is, the banking sector is technically at its “healthiest” ever—98% village coverage and record-low bad loans—so this isn’t a rescue mission. It’s a complete rewiring for the next 25 years. Or nothing.
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The Financial Reform Roadmap: Field Notes
It’s an ongoing situation where the government is trying to turn “stable” banks into “aggressive” engines of growth. Here’s the ground reality:
The Banking Brain Trust: This new committee is tasked with a “comprehensive review.” Insiders say the real debate will be on bank ownership and voting rights—sensitive topics that have been a disconnect for years. They want to see if the private sector can take more risks without breaking the system. Those too.
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The PFC-REC Power Move: In a massive first step for public sector NBFCs, the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) are being “restructured.” While the word “merger” wasn’t explicitly used, the goal is “scale and efficiency” to fund India’s net-zero 2070 goals. And then the share prices jumped 6% followed by a quick profit-booking dip.
FEMA Facelift: The Foreign Exchange Management (Non-debt Instruments) Rules are being shredded and rewritten. The goal? A “user-friendly” framework. They’re even hiking the individual investment limit for non-residents from 5% to 10%. It’s a clear “Welcome” sign for global retail capital.
Municipal Bond “Bait”: Larger cities are being offered a ₹100 crore incentive just for issuing a single bond over ₹1,000 crore. Let’s be real—the government wants cities to stop relying on hand-me-downs and start raising their own cash for infrastructure. Or nothing.
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Viksit Bharat: Financial Sector Pulse
| Initiative | Objective | Key Impact |
| Banking Committee | Deep review of ecosystem | Alignment with 2047 growth targets |
| PFC & REC Rejig | Restructure for scale | Massive funding for Energy Transition |
| FEMA Review | Simplify foreign investment | Modern, “Non-Debt” user-friendly rules |
| Municipal Bonds | ₹100Cr incentive for ₹1kCr+ issues | Self-reliant funding for mega-cities |
| Portfolio Investment | Hike Individual PROI limit to 10% | Boosted liquidity in listed equities |
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And Here’s the Kicker…
The government is moving toward a “Market Making Framework” for corporate bonds. The thing is, India’s bond market has always been the “quiet” sibling to the stock market. By introducing Total Return Swaps, they’re finally trying to give it some real teeth and depth. Those too.
One side comment—while the banks are celebrating, the promoter-led companies are sweating over the new 22% buyback tax designed to stop tax arbitrage. It’s a bit messy. Authentic, but definitely a “carrot and stick” Budget. It’s an ongoing situation. Or nothing.
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End…
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