Industry experts said the next phase of growth will depend not just on expanding access to financial services, but on improving the quality of credit, the sustainability of financial institutions and last-mile delivery.
As the Union Budget 2026 draws closer, stakeholders across the financial sector have urged the government to roll out policy measures aimed at strengthening the financial system by easing capital constraints, encouraging responsible credit growth and expanding financial inclusion.
Industry experts said the next phase of growth will hinge not only on wider access to financial services but also on improving credit quality, ensuring the long-term sustainability of financial institutions and strengthening last-mile delivery.
Focus should be on strengthening the financial ecosystem
Lokanath Panda, COO, BLS E-Services, said, “As the Union Budget approaches, the focus should be on strengthening the financial ecosystem that supports inclusive growth across savings, credit, and payments. While significant progress has been made in expanding account ownership and digital adoption, the next phase of financial inclusion will depend on improving account activity, credit flow to underserved segments, and last-mile service delivery.”
According to him, this will require sustainable operating models, adequate liquidity support, and aligned incentives for banks, intermediaries, and service providers. Policy measures that ease capital constraints and strengthen on-ground financial infrastructure will be crucial to ensure that financial inclusion leads to meaningful economic participation.
Manish Shah, MD and CEO, Godrej Capital, said, “As India moves into the next phase of financial deepening, the focus must shift from simply expanding credit to improving the quality, accessibility, and sustainability of finance. While capital availability has improved, the real opportunity lies in making finance more affordable, flexible, and aligned to the cash-flow realities of households, MSMEs, and emerging entrepreneurs. The Union Budget 2026 can play a meaningful role by deepening domestic liquidity and strengthening risk-sharing frameworks such as credit guarantees and co-lending structures.”
He also emphasised the need to encourage stable long-term savings and recognise high levels of tax compliance to strengthen trust and participation in the formal financial system.
Expect reforms on banking sector
Vivek Iyer, Partner and Financial Services Risk Advisory Leader at Grant Thornton Bharat, said banking sector reforms are expected to focus on consolidation, innovation, technology, and private capital.
“We expect reforms on the banking sector to be focused on consolidation, innovation, technology, and private capital. Consolidation may be aimed at easing the process of mergers and acquisitions in the small finance bank and urban co-op bank space. Innovation announcements may be centred on the use of new technology such as AI and Quantum computing,” he said.
On private capital, Iyer said reforms could include higher FDI limits for public sector banks and tax rationalisation for foreign banks to improve investor sentiment.
Pranav Haridasan, MD and CEO, Axis Securities, said markets are looking for continuity, credibility and execution in Budget 2026-27. “From a capital markets perspective, stability in taxation and policy consistency matter more than headline announcements. With India increasingly positioned as a structural growth market for global and domestic investors, a pragmatic approach to capital market taxation and long-term savings will be important to sustain participation and depth. A growth-supportive, fiscally disciplined Budget that reinforces confidence in India’s macro framework would be a clear positive for both the economy and markets,” he added.
Experts noted that the sector is looking for a Budget that moves beyond headline reforms and focuses on reinforcing the core foundations of the financial ecosystem. They emphasised the need for measures that enhance liquidity availability, reduce capital pressures, and support prudent, sustainable credit expansion.
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