(Image Source: EY)
There were high expectations for the Union Budget 2023-23 because the country was still recovering from the effects of COVID and the possibility of a global recession loomed large. The Union Budget was presented on Wednesday by the Finance Minister, and the business community had mixed reactions to it.
Let us monitor the key aspects of the budget in the banking sector, which is a significant pro-growth sector toward the revival and sustainable development of the country. The center claims that the budget heralds good news for both the industrial sector and the general well-being.
Improved Governance and Protection for Investors
In order to preserve public investment over the long term, good governance provides financial transparency, accountability, and investor responsibility as well as safeguards against asset waste.
This year's union budget announced changes to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act to enhance investor security and enhance bank governance.
Central Data Processing Center
A data center makes it easier to use IT equipment and operations for storing, processing, and distributing applications and data. The country is moving toward digitalization, so central data management is critical. As a result, the finance minister suggested setting up a centralized processing setup with field offices under the Companies Act so that businesses could respond more quickly through centralized form handling.
Financial Support for Digital Payments
In the country, digital payments have increased the income of small businesses and street vendors by making bank-to-bank transactions, even for small amounts, quick and secure. Everyone expected that the budget would give digital monetary systems a lot of support. FM Nirmala Sitharaman highlighted an increase of 76% in digital transactions and 91% in value when she shared data on digital payments for the previous year. She also promised to continue providing financial support for the digital public infrastructure in 2023 and 2024.
"With the right policy framework and incentives, India can continue to be a leader in the digital economic space and become one of the most innovative countries in the world," said Anurag Sinha, co-founder and CEO of OneScore and OneCard, praising the Union Budget.
FIS credited the government's 100 labs for developing 5G apps as an assurance for faster and more efficient digital transactions, according to Rajsri Rengan, Head of Banking and Payments, India and Philippines.
Introduction to Mahila Samman Bachat Patra
The budget for 2023 also made the economic empowerment of women a major theme and announced a once-in-a-lifetime small savings scheme called the Mahila Samman Savings Certificate that will run for two years until March 2025. Women and girls will be able to make deposits of up to Rs 2 lakh under the scheme over the course of two years at a fixed interest rate of 7.5% with the option to make partial withdrawals.
Benefits for Seniors
The budget increased the maximum deposit limit for saving schemes for senior citizens from Rs 15 lakhs to Rs 30 lakhs. Additionally, the increase in the monthly income account amount from Rs 4.5 lakhs for a single account to Rs 9 lakhs for a joint account.
Data Embassy
According to the proposed union budget for the year 2023, data embassies in GIFT IFSC will be established as part of the nation's digital continuity solutions. By employing diplomatic responses to unprecedented technical errors, this will assist the nation in data security.
(Image Source: Hindustan Times)
While these were positive banking sector updates, the union budget's other key implementations are likely to have an effect on banks' operations. One of them is the simplification of the KYC procedure, which will force the bank to modify its existing KYC procedure and implement the simplified new measure.