Union Budget 2026-27 introduced sweeping financial reforms including a high-level committee for banking review, NBFC restructuring, and MSME credit boosts, triggering a sharp sell-off in PSU bank stocks up to 6%. Finance Minister Nirmala Sitharaman highlighted the sector’s robust health before unveiling these forward-looking measures.
High-Level Banking Committee
FM proposes “High Level Committee on Banking for Viksit Bharat” to review structure, efficiency, governance, technology adoption, and risk management across commercial and co-operative banks.
Aims to align banking with India’s growth phase while prioritizing financial stability, inclusion, and consumer protection amid strong balance sheets and 98% village coverage.
Experts view it as credit-positive for long-term reforms, potentially examining corporate entry, mergers, and credit delivery enhancements.
NBFC Restructuring Push
Public sector NBFCs like Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) targeted for consolidation to boost scale, efficiency, and infrastructure financing.
Sets clear targets for NBFC credit disbursement and technology upgrades under Viksit Bharat vision.
MSME and Credit Support
Customized credit cards with ₹5 lakh limit for Udyam-registered MSMEs to aid small businesses.
Grameen Credit Score framework for public sector banks to better serve SHG members and rural borrowers.
Market Reaction
PSU bank stocks plunged up to 6% post-announcement, reflecting investor concerns over potential consolidation or stricter oversight.
