The Union Budget 2025-26, presented by Finance Minister Ms. Nirmala Sitharaman, introduces targeted reforms in the financial sector aimed at expanding credit access, simplifying compliance, and enhancing regulatory frameworks. These measures are designed to foster economic growth, encourage investment, and make financial services more accessible to both businesses and rural communities. Let’s break them down.
- Easier Access to Credit and Loans
The government is launching a ‘Grameen Credit Score’ framework to help rural borrowers, including Self-Help Group (SHG) members, access formal credit more easily. By assessing creditworthiness in rural areas, this initiative will open new financial opportunities for millions.
Additionally, the Partial Credit Enhancement Facility by NaBFID (National Bank for Financing Infrastructure and. Development) will improve the credit quality of corporate bonds in infrastructure, making it easier for companies to raise funds for large-scale projects.
- Boosting Foreign Investment in Insurance
The government has raised the Foreign Direct Investment (FDI) limit in insurance from 74% to 100%. This means more foreign capital will flow into the sector, leading to better insurance products, increased competition, and enhanced consumer financial security.
- Simplifying Compliance & Strengthening Regulation
The revamped Central KYC (CKYC) registry will be rolled out in 2025, creating a more efficient and unified customer verification system across financial institutions. This will simplify banking and investment processes for individuals and businesses alike.
Additionally, the approval process will be streamlined to speed up company mergers, reducing bureaucratic delays and making business restructuring more efficient.
- Building a Modern, Trust-Based Financial System
A High-Level Committee for Regulatory Reforms will be set up to review outdated regulations, improve the ease of doing business, and reduce unnecessary compliance burdens. Furthermore, an Investment Friendliness Index will rank states on business environment quality, fostering healthy competition among them.
The Financial Stability and Development Council (FSDC) will evaluate current policies and enhance their responsiveness to ensure that financial regulations remain relevant and effective. Moreover, the Jan Vishwas Bill 2.0 will decriminalize over 100 provisions across various laws, making financial regulations more business-friendly.
- A Financially Stronger Tomorrow
These reforms are set to fuel economic growth, simplify financial processes, and open new opportunities for individuals and businesses alike. Whether you want to expand your business, invest in housing, or manage your taxes more efficiently, these changes are designed to make your financial journey smoother.
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Disclaimer: The article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of The South Indian Bank Ltd. or its employees. The South Indian Bank Ltd and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/non-financial decisions based on the contents and information’s in the blog article. Please consult your financial advisor or the respective field expert before making any decisions.