New Delhi, Feb 01 As part of the financial sector reforms announced in the Union Budget 2026-27, the government on Sunday proposed restructuring Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) to achieve scale and improve efficiency among public sector non-banking financial companies (NBFCs).
Given that PFC and REC operate in largely similar segments of power-sector financing, any consolidation or restructuring could help eliminate overlap, improve scale efficiencies and strengthen credit delivery, according to industry observers.
Presenting the Budget in Parliament, Finance Minister Nirmala Sitharaman outlined a Viksit Bharat vision for NBFCs, with defined targets for credit expansion and technology adoption. She also announced the setting up of a High-Level Committee on Banking for Viksit Bharat, which will undertake a comprehensive review of the financial sector and align it with India’s next phase of growth, while safeguarding financial stability, inclusion and consumer protection.
Highlighting the strength of the banking system, Sitharaman said Indian banks currently have strong balance sheets, record profitability, improved asset quality and banking coverage extending to over 98 per cent of villages.
The Budget also proposed a comprehensive review of the Foreign Exchange Management (Non-Debt Instruments) Rules to create a more contemporary and user-friendly framework for foreign investments aligned with India’s evolving economic priorities.
To deepen the corporate bond market, the Budget announced a market-making framework with access to funds and derivatives on corporate bond indices, along with the introduction of total return swaps on corporate bonds.
To boost municipal bond issuances, large cities will be incentivised with Rs 100 crore for a single bond issuance exceeding Rs 1,000 crore. The existing AMRUT scheme, which supports issuances up to Rs 200 crore, will continue for small and medium towns.
Further easing investment norms, the Budget proposed allowing Persons Resident Outside India (PROI) to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme, while raising the individual investment cap from 5 per cent to 10 per cent and the aggregate limit for all individual PROIs to 24 per cent, from 10 per cent earlier.
