New Delhi, Feb 1 The Union Budget has largely focused on ease of doing business, rationalisation of the personal income tax slabs to encourage domestic consumption, further push to the flow of institutional financial resources to farmers, MSMEs and exports and above all maintaining financial discipline, Indian Banks’ Association (IBA) Chairman and Central Bank of India Managing Director and CEO M.V. Rao, said on Saturday.
The increase in the loan limit under the Modified Interest Subvention Scheme from Rs 3 lakh to Rs 5 lakh for loans taken through the KCC and India Post, coupled with India Post Payment Banks to act as a catalyst for the rural economy by providing services like DBT, Cash out, EMI pick up, credit services to micro-enterprises, insurance and assisted digital services, etc, have direct involvement of the banking sector.
"Proposal to support National Cooperative Development Corporation (NCDC) for lending operations for the co-operative sector is expected to be positive for the rural economy," said Rao.
Banks play a key role in funding the MSME sector. There are several proposals in the budget for the sector.
These are an increase in the investment and turnover limits for the classification of all MSMEs to help them grow further, enhancement of credit guarantee cover to MSMEs, startups and well-run exporter MSMEs, customised credit cards with a limit of Rs 5 lakh for micro-enterprises registered on Udyam Portal etc are positive measures for the MSMEs and are expected to help the banks to further increase the funding to these sectors.
"Enhancing the limit of Foreign Direct Investment in the insurance sector from the existing 74 per cent to 100 per cent to those companies which invest the entire premium in India, partial credit enhancement facility for corporate bonds for infrastructure by NaBFID, proposal to develop Grameen Credit Score framework by Public Sector Banks to serve the credit needs of the SHG members and people in rural areas, formation of high-level committee for regulatory reforms to review all non-financial sector regulations to improve governance, investment friendliness index of states etc augur well with the needs of the financial sector," Rao said.
The Budget has relied more on domestic drivers for growth and, at the same time, ensured to maintain fiscal discipline which could help the monetary policy as well.
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