Decoding The Priority Number 7 in FM’s Budget: Financial Sector
As the Union Finance Minister Nirmala Sitharaman tabled the last complete budget of the current government on Wednesday, everyone waited eagerly to see the priorities of the Centre just a year before the country goes into the poll mode. The FM announced ‘Saptarishi’ or the seven priority sectors of the Centre and the financial sector was the seventh priority.
Here are the key highlights of what the Union Budget 2023 has for the financial sector, straight from the FM’s speech -
Talking about the financial sector, the Finance Minister said, “Our reforms in the financial sector and innovative use of technology have led to financial inclusion at scale, better and faster service delivery, ease of access to credit and participation in financial markets.”
Sitharaman proposed several measures while tabling the budget. “A national financial information registry will be set up to serve as the central repository of financial and ancillary information. This will facilitate efficient flow of credit, promote financial inclusion, and foster financial stability. A new legislative framework will govern this credit public
infrastructure, and it will be designed in consultation with the RBI.”
The Union Budget also saw focus on Financial Sector Regulations. The FM stated, “To meet the needs of Amrit Kaal and to facilitate optimum regulation in the financial sector, public consultation, as necessary and feasible, will be brought to the process of regulation-making and issuing subsidiary directions.”
She added that to simplify, ease and reduce cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations. For this, they will consider suggestions from public and regulated entities. Time limits to decide the applications under various regulations will also be laid down.
The FM also spoke about GIFT IFSC. “To enhance business activities in GIFT IFSC, the following measures will be taken, which include delegating powers under the SEZ Act to IFSCA to avoid dual regulation, setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI, permitting acquisition financing by IFSC Banking Units of foreign banks, establishing a subsidiary of EXIM Bank for trade re-financing, amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act, and recognizing offshore derivative instruments as valid contracts.”
She further shared about the Data Embassy. “For countries looking for digital continuity solutions, we will facilitate setting up of their Data Embassies in GIFT IFSC.”
The Banking sector too was under the spotlight in the Union Budget 2023-24. To improve bank governance and enhance investors’ protection, certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act were proposed in the budget speech.
The budget further focuses on capacity building in the securities market, giving more power to the regulators. In her speech, the FM said, “To build capacity of functionaries and professionals in the securities market, SEBI will be empowered to develop, regulate, maintain and enforce norms and standards for education in the National Institute of Securities Markets and to recognize award of degrees, diplomas and certificates.”
Other important points in the financial sector included reclaiming of shares and dividends. For investors to reclaim unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority with ease, an integrated IT portal will be established. The centre is also supporting digital payments and fiscal support for this digital public infrastructure will continue in 2023-24.
