Nachiket Mor Committee

The Nachiket Mor Committee, formally the Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households, was constituted by the Reserve Bank of India (RBI) in September 2013 under the chairmanship of Nachiket Mor, then a member of the RBI's Central Board of Directors. The committee was a direct response to the persistent gap between India's banking penetration and its rhetorical commitment to inclusion, despite earlier interventions such as the Khan Committee (2004) on business correspondents and the Rangarajan Committee (2008) on financial inclusion. The RBI tasked the panel with framing a clear and detailed vision for financial inclusion and deepening, and with laying down a set of design principles to guide the development of institutional frameworks and regulation. It submitted its final report on 7 January 2014, anchored to a single time-bound aspiration that became its signature: a Universal Electronic Bank Account for every Indian resident above the age of eighteen by 1 January 2016.

The committee's procedural design rested on six "vision statements" and a quantified, accountability-driven approach to inclusion. It moved away from the prevailing emphasis on opening accounts as an end in itself and toward continuous, reliable access to a full suite of services—payments, deposits, credit, insurance and risk management. To operationalise this, the report proposed measurable benchmarks: each resident should have convenient access to a banking outlet within fifteen minutes' walking distance, and the report set sectoral credit targets, including the recommendation that the Adjusted Priority Sector Lending target be raised to fifty per cent of Adjusted Net Bank Credit, with weights assigned by sector and district to reward lending in underserved regions. The committee thus shifted the unit of analysis from the bank branch to the customer's access and the regulator's capacity to monitor outcomes.

A central mechanical innovation was the recommendation to license differentiated banks rather than relying solely on full-service universal banks. The committee proposed two new categories: Payments Banks, which would accept deposits up to a capped amount and provide payments and remittance services but would be barred from lending, and Wholesale Banks, oriented toward larger deposits and specialised lending. It recommended a lower entry capital requirement of ₹50 crore for these niche entities against the ₹500 crore prescribed for universal banks. The report further advocated converting the business correspondent model into a more robust agent network, strengthening the role of Non-Banking Financial Companies, and creating a State Finance Regulatory Commission to consolidate the regulation of smaller financial entities under a single state-level body.

Several of the committee's recommendations were absorbed into RBI policy within two years, making it one of the more consequential expert panels of the decade. In November 2014 the RBI issued final guidelines for Payments Banks and Small Finance Banks—the latter an adaptation of the committee's thinking on local and wholesale banking. In August 2015 the RBI granted in-principle approval to eleven applicants for Payments Bank licences, including Airtel, Paytm, Fino, India Post and Reliance Industries; Airtel Payments Bank commenced operations in 2017, followed by Paytm Payments Bank and India Post Payments Bank in 2018. The committee's universal-account vision dovetailed with the Pradhan Mantri Jan Dhan Yojana launched by the Union government in August 2014, and with the India Stack architecture built on Aadhaar and, later, the Unified Payments Interface.

The Nachiket Mor Committee is distinct from the Mor Committee on the National Health Stystem and from adjacent RBI panels with which it is frequently confused. It should not be conflated with the Usha Thorat or Deepak Mohanty committees on financial inclusion, nor with the Bimal Jalan Committee that vetted bank licensing in 2014. Crucially, its concept of differentiated banking differs from the universal banking model that India inherited from the Narasimham Committee reforms of 1991 and 1998: where Narasimham sought consolidation and full-service scale, Mor sought specialisation and a regulatory tolerance for institutions that perform a single function well. The committee's framework also differs from priority-sector lending as a standalone mandate, because it embedded credit targets within a broader, customer-centric vision rather than treating them as quota compliance.

Not all of the committee's proposals survived scrutiny. The recommendation to raise priority-sector lending to fifty per cent drew objection from commercial banks concerned about asset quality, and the proposed State Finance Regulatory Commission was never created, leaving the regulation of cooperatives and local entities fragmented. The Payments Bank model itself proved commercially fragile: several licensees, including Tech Mahindra, Cholamandalam and a Dilip Shanghvi–IDFC–Telenor consortium, surrendered their in-principle approvals before launch, and Paytm Payments Bank was barred by the RBI from accepting fresh deposits in 2024 over compliance failures. These outcomes illustrate the tension between the committee's inclusion goals and the thin-margin economics of serving low-income customers without a lending revenue stream.

For the working practitioner—whether a civil-services aspirant preparing the GS-III economy syllabus, a banking-sector analyst, or a policy researcher—the Nachiket Mor Committee remains the conceptual origin point of India's differentiated-banking architecture and a standard reference for examining how expert-committee recommendations translate into regulation. Its enduring relevance lies in the shift it institutionalised: from counting accounts to guaranteeing access, and from a one-size-fits-all bank to a tiered system in which payments, deposits and credit can be licensed and supervised separately. Understanding its design is essential to interpreting the subsequent evolution of Small Finance Banks, the Jan Dhan–Aadhaar–Mobile trinity, and the ongoing policy debate over whether inclusion targets should be measured by infrastructure or by usage.