Budget 2019: Key highlights for the Banking and Finance sector

The Union Finance Minister Nirmala Sitharaman today presented her first Budget for the financial year 2019-20.

Here are some key highlights of the budget:

On banking and finance sector

Financial gains from cleaning up of the banking sector are clearly visible. Non-performing Assets (NPAs) of commercial banks have come down by Rs 1 lakh crore. Number of public sector banks reduced by 8, through consolidation.

Rs 70,000 crore recapitalisation for public sector banks.

Non-banking Financial Companies (NBFCs) that are fundamentally sound should continue to get funding from banks and mutual funds. Govt will provide one-time 6-months partial credit guarantee for public sector banks, for the purchase of pooled assets of financially sound NBFCs.

Budget 2019

The National Housing Bank is also the regulator of the housing finance sector. She proposes the regulation to be returned to the RBI. Rs 100 lakh crore investment in infrastructure over the next five years.

Pension Fund Regulatory Authority to be separated from the National Pension Scheme Trust.

To improve capital inflows, the government to realign its holdings in CPFCs. The strategic disinvestment of select CPFCs will continue to remain a priority.

Air India disinvestment to be reinitiated. Government sets an enhanced target of Rs 1.05 lakh crore from disinvestment.

For Micro, Small and Medium Enterprises (MSMEs)

The Minister proposes a modern tenancy law. Loans of up to Rs 1 crore to be given to MSMEs for ease of access.

The government will create a payment platform for MSMEs to enable them to pay bills, and save time. The Government will extend pension benefits to 3 crore retail traders and shopkeepers who have a revenue of less than Rs 1.5 crore. This will be called the PM Karam Yogi Maan Dhan scheme.

For investments and markets

Investment by FIIs and FDIs in debt securities in infrastructure debt funds to be allowed.  Minimum public shareholding in listed companies can be increased from 25% to 35%, says the Minister, saying this is being considered.

A social stock exchange is proposed, for social and voluntary organisations, to raise capital, equity, and debt.

Global FDI fell to $1.3 billion from $1.5 trillion, but inflows in India remained strong at $54.37 billion, a growth of 6%.

“100%  FDI for insurance intermediaries.  Local sourcing norms to be eased for FDI in single-brand retail.”

Global Investors Meet to happen in India. The limit on FPI in a company increased to 24%. NRI investment in Indian capital markets is comparatively less. NRI investment to merged with FPIs.

New Denominations

India’s sovereign external debt to GDP is at less than 5%.

New Rs 20 coins to be made available soon. Part A concludes after 1 hour 35 minutes.

On taxation

  1. Taxpayers performed their duty.  She quotes from the Puranaanooru.
  2. Indirect taxes, due to a slew of efforts, the revenue has increased by over 78% to Rs 11.37 lakh crore.
  3. Rs 5 lakh minimum limit announced for taxpayers.
  4. A lower rate of 25% so far only applicable to companies with a turnover of Rs 250 crore. Propose to increase this limit to companies with an annual turnover of Rs 400 crore. This will cover 99.3% of companies.

To promote digital payments
Two percent TDS on withdrawals of Rs 1 crore in a year from bank accounts for business payments
No change on digital payment: MDR charges waived on cashless payment

FDI
 Local sourcing norms will be relaxed for the Single brand retail sector
Govt of open FDI in aviation, insurance, animation AVGC, and media

Investment
1. Existing KYC norms for FPIs to be rationalized and simplified to make it more investor-friendly
2. Long-term bonds for market
3. To allow FIIs & FPIs investment in debt securities issued by NBFCs
4. Credit Guarantee Enhancement Corporation to be set up long-term bonds with a specific focus on infra sector
5. Propose Social Stock Exchange under SEBI for listing social enterprises & voluntary organisations To merge the NRI portfolio route with FPI route
6. To hike the statutory limit for foreign investment in some companies
7. To set up a credit guarantee enhancement corporation
8. Govt will take up measures to make RBI & SEBI depositories interoperable
9. SEBI to mull increasing minimum public shareholding to 35% from 25%
10. User friendliness of trading platforms for corporate bonds will be reviewed, including issues arising out of capping of International Securities Identification Number
11. To deepen the corporate tri-party repo market in corporate debt securities. Plan to enable stock exchanges to allow AA rated bonds as collaterals.
12. Annual Global Investors’ Meet for attracting global players to come and invest in India.
13. To allow FPIs to subscribe to listed debt papers of REITs

(With inputs from an English Daily)

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