With the Union Budget 2026 approaching, financial services firms are closely watching for policy signals. The sector has been a key beneficiary of India's economic growth, but regulatory and tax changes can significantly impact business models.
Key Expectations
- Long-term capital gains tax rationalization for equity investments
- Clarity on cryptocurrency and digital asset taxation
- PLI scheme extension for fintech and AI companies
- GIFT City incentives for global financial services
- Credit guarantee scheme enhancements for MSMEs
Banking Sector Implications
Banks are expecting clarity on the bad bank framework and potential recapitalization support for public sector banks. The credit growth trajectory of 15%+ needs continued policy support. Digital banking regulations may see refinement.
NBFC and Fintech Outlook
NBFCs hope for rationalized regulatory burden under the Scale-Based Regulation framework. Fintechs are watching for digital lending guidelines and potential licensing clarity. The co-lending model is expected to receive continued policy support.
Investment Implications
Our analysis suggests maintaining overweight positions in large private banks and select NBFCs ahead of the budget. Avoid speculating on tax-sensitive segments. Focus on companies with strong fundamentals that can navigate policy changes.