High-level banking review, capital market boost, NBFC roadmap and digital push unveiled
Mumbai: The finance minister, Nirmala Sitharaman, in the Union Budget 2026, announced a slew of measures aimed at strengthening the domestic banking and financial services sector. The minister proposed establishment of a “High Level Committee on Banking for Viksit Bharat” to comprehensively review the sector and align it with India’s next phase of growth.
The High Level Committee will undertake a comprehensive review of the banking sector’s structure, governance, and future readiness to meet India’s expanding credit needs, while safeguarding stability and consumer interests.
Public sector banks are set to see further governance and technology-driven reforms aimed at improving efficiency and competitiveness. The Budget also announced the restructuring of Power Finance Corporation (PFC) and Rural Electrification Corporation (REC), alongside a comprehensive review of the Foreign Exchange Management (FEMA) (non-debt instruments) Rules.
Sitharaman also laid out a clear vision for Non-Banking Finance Companies (NBFCs) under the Viksit Bharat framework with defined targets for credit disbursements and technology adoption.
Capital market measures include a market-making framework for corporate bonds, introduction of total return swaps on corporate bonds, and access to derivatives on corporate bond indices. Municipal bond markets are incentivised through a Rs 100 crore incentive for single issuances exceeding Rs 1,000 crore, alongside continuation of AMRUT support for smaller issuances.
The Budget also announced Rs 2000 crore incentive allocation to UPI and RuPay reinforcing the importance of digital payments ecosystem.
The investment limit for an individual Person Resident Outside India (PROI) under the Portfolio Investment Scheme will be increased from 5 per cent to 10 per cent.
The overall investment limit for all individual PROIs will be raised to 24 per cent from the current 10 per cent.
The Budget proposed extending the period of tax deduction to 20 consecutive years out of 25 years for IFSC units and Offshore Banking Units, alongside rationalisation of applicable tax rates.
