Budget 2022 – Banking Sector, Major Announcements
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Budget 2022 – Banking Sector – Major Announcements for banking sector under Budget 2022. The major announcements which have been made in this Budget are as under:-
1. Maximum surcharge on long-term capital gain is capped at 15%.
2. Period of incorporation for eligible start-ups to claim the tax benefit is extended by 1 year
3. Income from the transfer of virtual digital asset shall be taxed at 30% with no deduction of expenses
4. Surcharge rate reduced from 12% to 7% on co-operative society having total income less than Rs. 10 crores
5. Income-tax return can be revised within 2 years on payment of additional tax
6. Rate of Alternate Minimum Tax (AMT) is reduced to 15% for co-operative societies
7. SEZ Act will be abolished and a new law will be enacted to enhance exports
8. Digital Rupee using block chain to be issued by RBI starting 2022-2023
9. IBC laws will be amended to enhance the resolution process and to facilitate cross border insolvency resolution
10. 5G will be rolled out in 2022-23 by private telecom players
11. 1,486 union laws were repealed last year in a step towards minimum government and maximum governance.
12. Pushing digital economy and fintech will be a priority for the Government
13. Start-ups would be promoted to facilitate ‘drone shakti’ for the promotion of drone usage
14. All post offices will come on the core banking system in year 2022
15. Issuance of E-Passports will be rolled out in 2022-23
16. 7 Engines have seen suggested for unison growth of India – Roads, Railways, Airports, Ports, Mass Transports, Waterways and Logistics infrastructure
Also Read – Union Budget 2022 Major Highlights – Sectorwise
CGTMSE Scheme revamp
In a further move to help MSMEs impacted by the pandemic, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) will also be revamped with required infusion of funds, the FM said. “This will facilitate additional credit of Rs 2 lakh crore for MSEs and expand employment opportunities,” she said.
Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) is a trust established by the Government of India, under the Ministry of Micro, Small and Medium Enterprise (MoMSME) and Small Industries Development Bank of India (SIDBI). Launched in 2000, CGTMSE offers credit guarantees to financial institutions that offer loans to MSMEs. CGTMSE provides a guarantee to lending institutions up to a certain limit for all lending done by them to the MSME sector.
Digital Payments: Scheduled Commercial Banks to set up 75 Digital Banking Units in 75 districts
“Digital banking, payments & fin-tech innovations have grown at a rapid pace in recent years…To mark 75 years of Independence, 75 Digital banking units will be set up in 75 districts of the country by scheduled commercial banks,” FM said. This is to ensure that benefits of digital banking reach every “nook and corner of the country
IBC Amendments
Finance Minister Nirmala Sitharaman also announced some proposed changes in the Insolvency and Bankruptcy Code (IBC) to enable seamless cross-border insolvency, as well as quicker dispute resolution.
“Necessary amendments will be made in the IBC for more efficient dispute resolution and enable cross-border insolvency resolution,” Sitharaman said.
Further, to accelerated corporate exits, the FM announced that voluntary winding up would be expedited to reduce the exit timeline from 2 years to 6 months.
What Was Not Announced
No mention was made on promises of privatisation of public sector banks announced in the last budget. While the Niti Aayog made recommendations to privatize banks like Central Bank of India, Indian Overseas Bank, the FM did not mention this in the budget, nor are the banking amendment bills required to move forward with privatization listed in this year’s budget session.
The big focus area for banking from the union budget over the years has been any announcements relating to infusion of capital into public sector banks. However, that was ruled out on the back of improved health of the financial sector, and a reduction in bad loans. The Finance Minister did not announce any further capital for the state run banks.
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