Kharbanda was born on 21 October 1944 in Hassanabdal, Attock District, Punjab, British India, which is known for the historic Gurdwara Panja Sahib. His family moved after partition and he did his early schooling from Jodhpur, Dehradun, Aligarh, and Delhi. Kharbanda did his graduation from Kirori Mal College, Delhi University.
After his studies he and a few of his college friends formed a theatre group called "Abhiyaan", and then joined Delhi-based "Yatrik", a bilingual theatre repertory founded by Director Joy Michael in 1964; he became its first paid artiste, though after a few years Yatrik collapsed as the Director was lecturing in US universities. That is when he moved to Kolkata in 1972 and started working with the theatre group "Padatik" which did Hindi theatre, under Director Shyamanand Jalan. Here he worked for a while before moving on to Mumbai and films.
He first got noticed in Nishaant (1974) by Shyam Benegal, with whom he went on to work in several more films including Manthan (1976), Bhumika: The Role (1977), Junoon (1978), and Kalyug (1980). Soon he was a regular with parallel cinema Directors, like in Godhuli (1977) with B. V. Karanth.
He portrayed Reema Lagoo's husband and Raj Babbar's brother in Shashi Kapoor's Filmwalas Productions' Kalyug. He has also appeared in period pieces such as Jodha Akbar and Lagaan. His most recent films are Aloo Chaat and Team: The Force. He has acted in a number of Punjabi films. He portrayed the hero in the legendary film Chan Pardesi (1980) and starred in the Punjabi comedy Mahaul Theek Hai (1999).
He has acted in six of Deepa Mehta's movies and all her trilogy films: Earth, Fire and Water. He did a German film in 2009.
