Speaking on the sidelines of a PHDCCI conference, Gurmeet Chadha, Chair of the BFSI Committee at PHDCCI and Managing Partner and Chief Investment Officer at Complete Circle Wealth Solutions, said the upcoming budget could offer greater clarity on the future of public sector banks.
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This could include steps to lower government ownership, allow higher private participation and encourage further consolidation, alongside a more comprehensive roadmap and policy nudges for the sector.
PHDCCI earlier this week presented a set of proposals to Finance Minister Nirmala Sitharaman focused on boosting micro, small and medium enterprises (MSMEs), including measures such as lower borrowing costs and interest equalisation schemes to support growth.
When asked about the banking, financial services and insurance space more broadly, Chadha pointed to steps already taken by the Reserve Bank of India outside the budget framework.
“So our expectation is improved credit, better transmission, and structurally, keep rates low because now India is in a cycle. This is high growth and low interest,” added Chadha. He added that many reforms had also been implemented outside the budget, particularly around easing foreign direct investment norms, which have driven a surge in inflows.
He further said many of the reforms have been implemented outside the budget , particularly around easing foreign direct investment (FDI) norms, which has led to a surge in inflows—nearly $10 billion, the highest level of FDI.
India’s financial sector saw a flurry of big-ticket deals in 2025, including a handful of rare transactions in which foreign banks acquired sizeable stakes in domestic lenders. In October 2025, private equity firm Blackstone agreed, through a Singapore-based affiliate, to take a 9.9% stake in Federal Bank while Warburg Pincus and the Abu Dhabi Investment Authority also committed $877 million to IDFC First Bank earlier in the year through convertible preference shares.
At the same time, India’s fintech lending ecosystem has expanded rapidly in the recent past with the entry of new players, underscoring the need for a clear and comprehensive regulatory framework that strengthens lending practices and enhances transparency in reporting.
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Pradeep Chauhan, founder of fintech startup Finfinity, said the foundation for digital payments was steadily being put in place. He added that the government has already rolled out several initiatives in this area. Public infrastructure, in particular, is critical as processes become increasingly digitised.
For MSMEs, lenders have stepped up their approach, using digital underwriting, faster loan approvals and customised products tailored to different business models.
Vishal Biraia, Vice President–Equities at Bandhan AMC, said targeted government support could be crucial for smaller firms facing external shocks.
“This particular space has taken a lot of hit because of the trade related issues. A lot of smaller companies actually export stuff from engineering products, leather, textiles, plastics, toys, furniture and we have been out tariffed as we would want to call it,” he said.
So some support from these kind of entities would be essential for them to pass through this phase of pain and then once things recover then they can withdraw the support as has been done in several instances in the past, added Biraia.