Budget 2022: BFSI seeks stimulus to mitigate Covid-19 pandemic damage

With an objective to boost the banking, financial, services and insurance sector, the industry expects a couple of measures from the government in the upcoming Budget 2022 on February 1. A survey conducted by Grant Thornton Bharat’s on pre-budget expectations showed that over 75 per cent of the respondents want to regulate cryptocurrencies and harmonisation of tax and regulatory incentives for alternate investment funds (AIFs) between the domestic tariff area and Gujarat International Finance Tec-City (GIFT City).

The survey further showed that 77 per cent of respondents want green energy to be included in priority sector definition and a similar number of respondents also want public credit registry (PCR) to be implemented. A PCR is an information repository where all information about existing as well as new borrowers is stored.

Commenting on the survey, Vivek Iyer, partner-financial services, Grant Thornton Bharat said, “The market survey demonstrates the expectation for the government to be forward-looking by focusing on initiatives around evolving risks that help strengthen stability and growth of the financial services ecosystem.”

To gauge the market sentiments and better understand the expectations from Union Budget 2022, Grant Thornton Bharat conducted a series of surveys across sectors. More than 1,000 respondents participated in these surveys across digital platforms.

As much as 57 per cent of the respondents also voted for fiscal stimulus measures to mitigate damages from the ongoing Covid-19 pandemic, but stood against moratoriums to be provided by the banking system (57 per cent), which reflects an underlying recovery sentiment.

Consulting firm Primus Partners believe that growing non-performing assets are one of the major challenges for the banking, financial and services sector. “Banks witnessing a rise in non-performing assets (NPAs) which have increased from 7.5 per cent last year to 13.5 per cent in September 2021. The key issue is with the public sector banks which have been impacted the most during the pandemic period. In order to finance the growth driven by private investment, there is a need to help improve the balance sheets by looking at initiatives beyond bank consolidation,” it said.

Besides, the majority of respondents (61 per cent) also believes that the regulatory sandbox approach should be suggested for innovations around decentralised finance to learn more about decentralised finance in a test environment.

In another report, Atanu Chakraborty, former economic affairs secretary and part-time chairman of HDFC said “The biggest challenge to the financial system today is arbitrage that exists between regulated entities such as banks, NBFCs and unregulated fintech entities. Unless sandbox-oriented solutions are developed, this may pose a real threat to financial system stability.”
 

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