Banking Sector Lauds Union Budget 2023, Calls It ‘Focused’

As the Union Finance Minister Nirmala Sitharaman read out the Union Budget 2023-24 in the Parliament on Wednesday, the Banking sector was ready to laud the FM and the Centre for a ‘People Friendly Budget’. Here’s what the sector experts said - 

Sanjiv Chadha, Managing Director & CEO, Bank of Baroda said: “In times of unprecedented volatility and uncertainty, the Government has maintained a consistent stance across five definitive themes – follow a path to fiscal prudence, continue to press on the capex accelerator to support growth and give a boost to private sector investment, provide adequate support to the most vulnerable sections and those who have been impacted the most by the pandemic, follow conservative & pragmatic budget maths and move further towards simplification and reform. This combination of factors bodes well for the Indian economy as we look forward to FY2024 and beyond.”

Parul Mittal Sinha, Head, Financial Markets, India and Head Macro Trading, South Asia, Standard Chartered Bank said : "The FY24 budget stays focused on fiscal consolidation and the glide path amid a very welcome increased thrust on capex. Positive impact for Government bonds market as gross borrowing of Rs 15.4 trillion is as per market expectations. We expect 10Y government bond to trade in the range of 7.15 per cent to 7.35 per cent in the near term amid peaking rates and robust domestic demand for bonds. The focus now shifts to the FOMC and MPC decision on 1 and 8 February; we see 25bps hike each to terminal rate of 4.75 per cent and 6.50 per cent respectively.”

Surojit Shome, Managing Director and CEO, DBS Bank India said: "The Finance Minister has signalled the government’s intent to maintain stability, while encouraging balanced economic growth. The proposed policy reforms and increased capital infusion will provide an impetus to MSMEs and the start-up ecosystem. Coupled with the proposal to harness the power of Artificial Intelligence (AI) by setting up Centers of Excellence, this should help stay in sync with the latest innovations. It is also very encouraging to see the FM allocating more funds for transitioning to a more green and responsible economy.”

Zarin Daruwala, Cluster CEO, India and South Asia markets (Bangladesh, Nepal and Sri Lanka), Standard Chartered Bank said: “The budget has admirably balanced fiscal consolidation and macro stability with a continued and expanded focus on Capex-led growth. The Capex budget is at its highest in nearly two decades, led by railways with a 5x multiplier effect. More importantly, the infra boost with a strong focus on supporting “green” growth paves the way for a Sustainability led trajectory. The emphasis on boosting consumption, urban upgradation, tourism, and technological transformation will provide impetus to economic growth. In addition, the credit enhancement for MSMEs, review of regulations to ease compliance, enhanced data sharing and e-governance frameworks, and further enabling provisions for GIFT City will catalyse Credit and Financial Market development."

Ajay Kumar Srivastava, MD & CEO, Indian Overseas Bank said: "Budget 2023 is a balanced budget prioritising Infrastructure & Investment, Green growth, inclusive development and reaching the last mile. Rs 9,000 crore for revamping Credit Guarantee Scheme in MSMEs is a welcome step."

Dinesh Khara, Chairman, SBI said: “The Union Budget is growth accretive, fiscally prudent and consumption supportive. The huge emphasis on capital expenditure could be the perfect recipe for a private investment cycle that is already visible. Support for MSME and Agriculture will broaden the base for credit growth. Reasonable Government borrowing numbers will support lower interest rates and the move towards a clutter free new tax regime will significantly spur consumption. Overall, the budget is forward looking and will support an inclusive economy.”

Prashant Kumar, MD & CEO, YES Bank said: "It attempts an inclusive growth structure for the economy through various measures that are expected to reach the last mile. The effective capex of the Central government was enhanced to Rs 13.7 lakh crore, or 4.5 per cent of the GDP was an acknowledgment that capital expenditures are crucial for the economy and could boost the growth. As the efficiency of capital expenditures is higher at the state level, the government once again earmarked Rs 1.3 lakh crore as a 50-year loan to States, which would incentivise capital expenditure. Emergency Credit Line Guarantee (ECLG) scheme continues with an additional Rs 9000 crore added to the corpus which would boost the fund flow for the MSME sector."

Murali Ramakrishnan, MD & CEO, South Indian Bank said: "This year’s Union Budget is noteworthy on a number of counts. Effective implementation of schemes like opening of 47.8 crore PM Jan Dhan Bank accounts will benefit common citizens. With the establishment of the Urban Infrastructure Development Fund (UIDF), we expect infrastructure in Tier 2 and Tier 3 cities receiving a significant boost. The enabling of the Digital locker for MSMEs for securely storing and sharing documents online with various authorities, regulators and other entities will encourage seamless business."

Venkatraman Venkateswaran, Group President & CFO, Federal Bank said: "Budget 2023-24 is an Infrastructure Spending oriented budget with 7 priorities set by the FM. The budget unveiled tax cuts and set the virtuous cycle of job creation. Out of the overall growth agenda, specifically looking at Banking sector, there are two major proposals. Firstly on Agricultural credit, the target is hiked to Rs 20 lakh crore, which will help drive rural growth. Additionally, the revamped credit guarantee scheme for MSMEs, with infusion of Rs 9000 crore into the corpus, will enable additional collateral free credit guarantee of Rs 2 lakh crore."

Gayathri Parthasarathy, Partner & Leader, Financial Services, PwC India said: "Overall the FY 2023-24 national budget focusses and builds on the vision laid out by the FM in 2019 of inclusive growth, macroeconomic stability and sustainable growth. Financial services features as one of the seven priorities in the union budget and the focus is to ensure financial inclusion at scale, ease of access, better and faster service delivery as well as enhanced participation in financial markets." She detailed the key updates as follows - Revamped credit guarantee scheme for MSME from 1 April 2023 to the tune of 9000 crore in the corpus , this will enable additional collateral free credit of 2 lakh crores and the cost of credit will be reduced by 1 per cent, Setting up of national financial registry to support efficient flow of credit and promote financial inclusion. RBI will play a key part in designing legislative framework for this central infrastructure, considerable focus has been given towards simplifying and reducing the cost of compliance by promoting public consultation to carry out a comprehensive review of existing consultations, the bank will need to update and enhance their systems and models to ensure simplified KYC which is risk based in nature. Ability to leverage the central infrastructure for retail as well corporate customer information such as identity and address.

Chandra Shekhar Ghosh, MD & CEO of Bandhan Bank said: "Budget 2023-24 is a well-rounded progressive & inclusive budget. The focus on important parameters like boosting consumption and inclusion is a welcome measure for our growing economy. The government has laid an important thrust on Capital Investment which will enhance consumption and create employment, both of which have been important areas of attention, especially post the pandemic. Allocation of the Budget to PM Awas Yojana will further boost the housing sector. Support to  MSME sector along with enhancement of credit guarantee scheme will provide much needed relief to the sector. The new slabs of taxes will further help boost economic parameters like consumption, thus providing more impetus to economic growth." 

Govind Singh, MD & CEO, Utkarsh Small Finance Bank said: “In the background of India being considered as one of the largest growing economies in the coming financial year, the budget has laid down an all-round emphasis on inward thrust.  Focus on capital expenditure, schemes on social and economic upliftment under the narrative on Atmanirbhar Bharat and Saab Ka Saath Saab ka Vikas are major initiatives. Budget 2023 lays down prescription on inclusive development, mechanism for benefits to reach the last mile, infrastructure growth, green growth and vibrant financial sector."

"The government has also indicated its willingness to relook at various regulations including BR Act. Further lowering of income tax rates gives greater power to spend or save in the hands of the common man. In addition, fresh allocation to credit guarantee scheme for MSMEs and push on digital architecture will augur well for access and affordability of funds for small and medium income profile borrowers to continue building their vocation”, Singh added.