Top bankers have welcomed the thrust of the Union Budget 2017-18 on the rural economy, affordable housing, proposal to increase the allowable provision for non-performing assets, and confiscating the local assets of big-time economic offenders. Here’s what they had to say:
Arundhati Bhattacharya, SBI Chairman: This year’s Budget has maintained logical continuity from the previous year’s Budget. As far as new announcements are concerned, most of them were unanticipated. Capping the cash transition limit to ₹3 lakh, reduction in minimum cash donation to political parties to ₹2,000, and the novel idea of electoral bonds are in the surprise list.
The capping of cash transactions will help banks reduce cash intensity. This in turn will help in freeing up manpower at branches for undertaking more value-added services.
The thrust on digital economy was on expected lines. This will help banks expand their digital footprint as well as to meet the additional 10 lakh new POS terminals target by March 2017.
The agriculture lending target has been substantially revised to ₹10 lakh crore supported by further provisions for agriculture insurance.
In this context we believe it is important to create credit-absorption capacity rather than just enhance lending targets and this can be done by supporting infrastructure creation in rural areas which also the Budget aims at doing.
The Draft Bill to curtail the menace of illicit deposit schemes is also a welcome move.
And, affordable housing getting infrastructure status is positive for all stakeholders and is expected to give this sector a boost.
Rajeev Rishi, Chairman, Indian Banks’ Association: Amidst huge expectations from the government, the Finance Minister has presented a Budget with a thrust on the rural sector and digitalisation. In the midst of global uncertainties fuelled by protectionism and market volatility, the focus is rightly on spiralling domestic consumption to aid overall growth.
Hence, lot of thrust is given to rural sector on education, employment and rural infrastructure. Also, the assurance given by the Finance Minister to stick to the 3 per cent fiscal deficit target in future shows the resolve of the government to maintain the fiscal discipline despite many challenges.
As for the banking sector, recapitalisation to the tune of ₹10,000 crore for public sector banks, in the lines of Indradhanush scheme, is a positive and would provide them some additional resources for lending to aid growth.
Listing and trading of security receipts issued by securitisation companies is another good move. Infrastructure status to affordable housing sector would help increase the flow of funds to this segment in a big way and indirectly aid several industries associated with construction along with employment.
Thrust on digitalisation in several segments would help in the ease of doing business and reduce transaction costs.
Chanda Kochhar, MD and CEO, ICICI Bank: The Budget has achieved the right balance between providing a growth impetus and maintaining fiscal prudence.
It has comprehensively addressed all areas of socio-economic priority: farmers, poor and under-privileged sections of society, infrastructure development and strengthening of the financial sector.
The Finance Minister has rightly prioritised investment in infrastructure and the rural economy, with a focus on inclusive growth and capacity building.
The increase in capital spending and the proposals for investment in a range of areas from affordable housing to roads and railways would not only have a multiplier impact on other sectors of the economy but also enhance employment generation and make the growth inclusive. The thrust on digital transactions will increase the size of the formal economy and also make the payment systems more convenient and efficient.
The tax measures are aimed at improving direct tax mobilisation by broadening the tax base and improving the tax administration.
The continuity in policy, with the over-arching objective of sustainable and inclusive growth underpinned by good governance, is very welcome.
Melwyn Rego, MD & CEO, Bank of India: The Budget is pro-poor, pro-farmer, pro-small business and pro-infra while maintaining fiscal prudence and being pro-growth.
It remains true to its dictum to ‘Transform, Energise and Clean’ India.
A positive for the banking sector is the thrust accorded to evolving a swifter and effective resolution mechanism. Provision for NPAs to avail tax benefits has been raised.
Overall, the Budget is pragmatic, focusses on tax compliance, improves the ease of doing business, brings about a transformative shift in governance and is expected to broad-base the India growth story.