Budget 2019 Reaction by Mr. Jaikishan Parmar (Sr. Equity Research Analyst - BFSI, Angel Broking Ltd)
"There are two things playing out for the banking sector from the Union Budget. On the hand, the higher fiscal deficit target set at 3.4% for 2018-19 and at 3.4% for 2019-20 will mean that the RBI may not be too keen to cut rates in the immediate future. However, on the positive side the commitment of the Finance Minister in his budget speech increase allocation for recapitalization to beyond Rs.2.60 trillion if required, will go down well with the banks. Also, banks have been assured that the government will continue to provide any capital required that is justified by the banks. Overall, banks should also benefit from the Kissan Samman Yojana where the farmers are being assured Rs.6,000 per year directly credited to their DBT bank accounts.
Specifically, in case of NBFCs, the benefit will be fairly large since they are often the last mile lenders on behalf of banks. The Kissan Samman Yojana will improve the last mile savings collections."