By Sourav Shekhar
New Delhi, Feb 1 (.) The banking sector has broadly welcomed the union Budget 2026-27, viewing it as a continuation of policy stability and fiscal discipline while laying out a clear roadmap for long-term economic growth.
Bankers believe the Budget strikes a careful balance between near-term challenges and structural reforms aimed at strengthening India’s economic foundations.
Reacting to the Budget, Challa Sreenivasulu Setty, Chairman of State Bank of India and the Indian Banks’ Association, said the proposals reflect continuity and predictability in policymaking.
“The union Budget 2026-27 maintains policy continuity, tax predictability while attempting a fine balancing act between rural and urban, legacy and sunrise sectors,”
He noted that the structural focus on emerging areas such as manufacturing, semiconductors, data centres, artificial intelligence and infrastructure underlines the government’s intent to build long-term competitiveness.
Setty also highlighted the significance of measures aimed at small businesses.
“The announcement on setting up a dedicated SME Growth Fund and mandate on TREDS backed by Credit Guarantee Support will definitely act as a key driver for the MSME sector,” he said, adding that major initiatives in pharmaceuticals, tourism, skilling and sports would further facilitate development and employment generation.
Echoing similar views, Prashant Kumar, Managing Director and CEO of YES Bank, said the Budget should be assessed in the context of the government’s fiscal journey over the past few years.
“This Budget needs to be seen in connection to the previous few year’s Budgets, especially when it comes to the Finance Minister carefully managing the near-term objectives with longer-term goals,”
Kumar noted that while expectations of a bumper resource mobilisation year were limited, with FY27 growth pragmatically assumed at 10 per cent, the government succeeded in reducing public debt and fiscal deficit levels as a percentage of GDP, remaining aligned with the roadmap of fiscal consolidation.
He added that meeting these targets despite higher resource sharing with states, as recommended by the 16th Finance Commission, was commendable.
Highlighting the long-term strategy, Kumar said the Budget remains focused on harnessing India’s demographic dividend and building a robust and resilient financial sector through continued structural reforms and the use of technology, including artificial intelligence, to boost productivity.
He welcomed the thrust on semiconductors, electronics manufacturing and dedicated Rare Earth Corridors, saying these measures would help make the economy more self-reliant and insulated from global supply-chain disruptions.
Addressing near-term challenges, Kumar said the Budget has also taken steps to support labour-intensive sectors facing pressure from global trade headwinds, including targeted support for textiles and apparel through capital assistance for machinery and technological upgrades.
Building on last year’s MSME measures, he described the announcement of equity support through a Rs 10,000 crore SME Growth Fund as a key positive for small businesses.
Kumar further welcomed the renewed focus on the services sector, noting that amendments to safe harbour rules for the IT sector, along with an enhanced threshold, and the decision to offer a tax holiday till 2047 to foreign companies providing global cloud services using data centres in India would help attract long-term global investments.
Overall, the banking sector believes Budget 2026-27 reinforces confidence, supports emerging sectors and strengthens the role of banks in financing sustainable and inclusive economic growth.
. SAS PRS