Budget 2026: FM promises high-level panel on banking for Viksit Bharat
Improved capital channels for SMEs will boost banks that are building these franchises
Last Updated: Feb 01, 2026, 19:14 IST2 min
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Finance Minister Nirmala Sitharaman on Sunday announced the plan for setting up of a high-level committee on “banking for Viksit Bharat” that will recommend reforms to improve efficiency across the banking system, including non-banking financial companies (NBFCs).
2025 was a mixed bag for India’s banking sector. On one hand, mid-sized private banks lined up huge capital infusion from strategic investors and private equity, non-performing assets fell sharply, banks became more risk-averse and their balance sheets improved; on the other, banks struggled with raising deposits in an uncertain lending environment.
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IndusInd Bank’s Managing Director and CEO Rajiv Anand commended the government for the plans to set up the committee. “The debate on ownership of banks and voting rights are important and there has been a disconnect. These two issues will form the crux of how the banking industry will evolve over the next 25 years,” Anand told CNBC TV18.
He said the rough cut of how the regulator had been looking at these two issues was seen through the SMBC-Yes Bank transaction and the Dubai-based NBD-RBL Bank deal.
Sitharaman also announced a Rs10,000 crore SME Growth Fund to scale high‑potential firms. The fund will operate alongside incentive frameworks that reward SMEs meeting select criteria such as productivity, formalisation and export readiness.
There will also be a Self‑Reliant India Fund that will get a Rs2,000 crore top‑up. This is expected to support micro enterprises that remain capital-starved despite credit guarantee schemes.
Anand said SMES often struggled with issues relating to the choking of working capital. These reforms would be of great assistance to these small businesses. “Banks like ours who are working to build a large MSME banking franschise will find this a huge positive.”
Vidushi Gupta, partner, Khaitan & Co, told Forbes India that the setting up of the banking committee and a review of FEMA non-debt framework together point to a more investment-friendly operating environment. “It could materially improve ease of capital deployment into regulated financial institutions. Whether this process would even touch sensitive issues like voting-rights limits in banks remains to be seen, but the review of the architecture itself is definitely a strong positive for investor confidence,” Gupta said.
Seshadri Sen, head of research and strategist at Emkay Global Financial Services, highlighted the need for a high-level banking committee.
“India’s banks have high profitability but not enough growth. But, in a uncertain economic ecosystem like now, they are risk averse. What India needs is more competition in the banking sector and the push to the sector to take more risks,” he said. He added that public-private-partnership in the banking sector and diluting the government stake in public sector banks, addressing controlling stakes in banks could all be issues which need more debate and understanding, he said.
Shares of Power Finance Corporation and REC rose intraday on Sunday—PFC touching Rs379.5 and REC Rs364 on the BSE—after the finance minister announced plans to restructure the two state-run non-bank lenders as part of efforts to strengthen public sector financial institutions. However, both stocks pared gains to close lower due to profit-taking.
Read Forbes India's complete Budget 2026-27 coverage here
First Published: Feb 01, 2026, 19:17
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