Nachiket Mor Committee

The Nachiket Mor Committee was set up by the RBI in 2013 to find ways to make financial services more accessible to low-income households and small businesses.

The Committee looked beyond simply opening bank accounts. It focused on ensuring people could actually access and use banking, credit, insurance and payment services.

Why Was the Committee Needed?

Although banking services had expanded, many people—especially in rural areas and low-income groups—still had limited access to formal finance.

The Committee focused on problems such as:

• Limited access to formal banking
• Dependence on informal lenders
• Difficulty in getting affordable credit
• Poor access to insurance and payment services
• High cost of financial transactions

Key Objectives of the Committee

The Committee aimed to make financial services universal, affordable and easily accessible.

Its key objectives included:

• Universal bank accounts: Ensure everyone has access to a basic bank account.
• Easy access to finance: Improve access to credit, insurance and other financial services.
• Low-cost payments: Make payment systems faster, cheaper and more accessible.
• Greater competition: Encourage innovation and new players in financial services.

Major Recommendations of the Nachiket Mor Committee

Differentiated Banking

One of its important ideas was to allow banks to have different roles and areas of specialisation.

It recommended:

• Payments Banks: Focus on deposits, payments and remittances.
• Small Finance Banks: Focus on credit for small businesses and low-income households.
• Greater competition: Encourage more participants in the financial sector.

Universal Electronic Bank Account

The Committee proposed a Universal Electronic Bank Account (UEBA) for every Indian resident.

The account was intended to be:

• Low-cost
• Digitally accessible
• Linked with payment systems
• Useful for receiving government benefits

The idea was to make a basic bank account a gateway to wider financial services.

Focus on Digital Payments

The Committee recognised that financial inclusion would remain incomplete without affordable and reliable payment systems.

It therefore supported:

• Low-cost digital payments
• Interoperable payment systems
• Wider use of technology
• Lower transaction costs

Improving Credit for Small Businesses

Small businesses often struggle to obtain formal loans because they may lack collateral, proper documentation or a strong credit history.

The Committee therefore suggested:

• Cash-flow-based lending
• Better credit information systems
• Specialised institutions for small borrowers
• Easier access to formal credit

Customer-Centric Regulation

The Committee favoured a shift from a bank-centric to a customer-centric approach.

It also supported proportional regulation, under which regulatory requirements would reflect the size, activities and risks of different financial institutions.

Impact on Indian Banking

The Committee’s recommendations influenced India’s move towards differentiated banking.

Its ideas were reflected in the development of:

• Payments Banks
• Small Finance Banks
• Digital financial services
• Wider access to basic banking facilities

Why is the Nachiket Mor Committee Important?

The Committee’s recommendations helped shape India’s approach to financial inclusion and banking innovation.

Its broader significance includes:

• Wider access to formal finance
• Reduced dependence on informal credit
• Better delivery of government benefits
• Improved access to small-ticket credit
• Expansion of digital payments
• Greater competition in banking

Conclusion

The Nachiket Mor Committee played an important role in shaping India’s modern financial-inclusion framework. Its emphasis on universal bank accounts, differentiated banks, digital payments and easier access to credit influenced several subsequent banking reforms.

FAQs 

When was the Nachiket Mor Committee formed?

The Committee was constituted by the RBI in 2013.

What was its main objective?

To provide comprehensive financial services to small businesses and low-income households.

What did the Committee recommend for banking?

It recommended differentiated banks, particularly Payments Banks and Small Finance Banks.

What is a Universal Electronic Bank Account?

It was a proposed basic, low-cost electronic bank account for every Indian resident.

Why is the Committee important?

Its recommendations significantly influenced India’s financial inclusion and differentiated banking reforms.