Union Finance Minister Nirmala Sitharaman on Sunday presented the government's comprehensive vision for non-banking financial companies (NBFCs) within the ambitious Viksit Bharat framework. During her Budget speech in the Lok Sabha, she outlined specific targets for credit expansion and technology adoption, positioning the sector as crucial for India's next phase of economic growth.
Clear Targets for Credit and Technology
Sitharaman emphasized that the "vision for NBFCs for Viksit Bharat has been outlined with clear targets for credit disbursement and technology adoption." This strategic focus aims to leverage the financial sector's current strength to support broader economic development goals. The minister highlighted that India's financial system is currently robust, with banks demonstrating healthy balance sheets, record profitability, improved asset quality, and banking coverage exceeding 98 percent of villages nationwide.
Restructuring Public Sector NBFCs
As part of efforts to enhance scale and operational efficiency in public sector NBFCs, the finance minister announced significant restructuring plans. "In order to achieve scale and improve efficiency in the Public Sector NBFCs, as a first step, it is proposed to restructure the Power Finance Corporation and Rural Electrification Corporation," Sitharaman declared during her parliamentary address. This move represents a concrete step toward modernizing key financial institutions that play vital roles in infrastructure and rural development financing.
Broader Financial Sector Reforms
The NBFC proposals were presented alongside comprehensive measures for the entire banking and financial sector. A notable announcement was the establishment of a 'High Level Committee on Banking for Viksit Bharat' that will conduct a thorough review of the sector and align it with India's evolving growth requirements. Sitharaman noted that the current strength of the financial sector provides an opportunity to futuristically evaluate reforms needed to sustain reform-led growth.
Foreign Investment Framework Review
In addition to domestic financial sector initiatives, Sitharaman announced a comprehensive review of the Foreign Exchange Management (Non-debt Instruments) Rules. This review aims to create a more contemporary and user-friendly framework for foreign investments, consistent with India's changing economic priorities and global integration objectives.
Strategic Importance of NBFCs
The finance minister underscored the critical role NBFCs are expected to play in expanding credit reach and supporting economic development under the Viksit Bharat vision. With the financial system in a strong position characterized by healthy balance sheets and historic profitability highs, the government sees this as an opportune moment to implement transformative reforms that will position NBFCs as key drivers of financial inclusion and economic growth.
Sitharaman's announcements reflect a strategic approach to leveraging India's financial sector strengths while addressing areas requiring modernization and efficiency improvements. The proposed restructuring of public sector NBFCs, combined with clear targets for credit expansion and technology adoption, represents a comprehensive roadmap for the sector's development within the broader Viksit Bharat framework.
