In her Union Budget speech for 2026-27, Finance Minister Nirmala Sitharaman outlined several proposals in the financial sector, aimed at strengthening India's banking system and enhancing ease of doing business under the Union goverment's Viksit Bharat vision.
A major announcement was the proposal to establish a high-level committee on banking This panel will conduct a comprehensive review of the entire banking sector, including banks and non-banking financial companies.
The objective is to align the sector with India's next phase of economic growth, while ensuring financial stability, greater inclusion, and strong consumer protection.
The committee will recommend reforms to improve efficiency, scale, and preparedness for future challenges. To bolster public sector financial institutions in the power domain, Nirmala proposed restructuring the Power Finance Corporation and Rural Electrification Corporation.
This step seeks to achieve greater scale and operational efficiency in these key non-banking entities, supporting infrastructure financing and the government's push for energy sector development.
She also announced a comprehensive review of the Foreign Exchange Management Act (FEMA) non-debt instruments rules. The aim is to create a more contemporary and user-friendly framework for foreign investments, consistent with evolving economic priorities. This move is expected to simplify procedures and attract more global capital into Indian markets.
On deepening bond markets, proposals were made to promote corporate and municipal bonds. Incentives include measures to encourage larger issuances by municipal corporations, fostering alternative funding sources for urban infrastructure.
In a step toward ease of doing business and broader foreign participation, individuals residing outside India will now be permitted to invest in equity instruments of listed Indian companies through the portfolio investment scheme.
Additionally, the investment limit for each such individual is proposed to increase from 5 % to 10 %, with the overall combined limit for all such investors rising from10 %t to 24 %. This change is designed to boost liquidity in equity markets and draw more diverse international investment.