The upcoming Union Budget 2025 on February 1 is expected to include big announcements for the banking, financial services, and insurance (BFSI) sector. In the previous budget, Finance minister Nirmala Sitharaman made major announcements on banking, financial services, and insurance. Rationalisation of tax on capital gains was announced for various classes of assets. The Finance (No. 2) Bill, 2024 proposed to increase the Securities Transaction Tax (STT) applicable on futures and options. However, the applicable rates on certain transactions remain unchanged. The Modi government also announced abolishment of Angel Tax with effect from April 1, 2024 as imposed by the Finance Act, 2012.
Axis Securities expects Budget 2025 to continue to emphasise on capital expenditure (Capex), which could act as a trigger to support corporate credit growth for banks.
In the microfinance sector, the brokerage expects some steps in the form of a dedicated funding window, relaxation in qualifying assets norms and a possible credit guarantee mechanism by the government to support the pained microfinance sector.
When it comes to the insurance sector, the brokerage expects aligning with the view of ‘Insurance for All 2047’, a change in GST rates on insurance to improve affordability and boost penetration in the country along with a possible increase of tax exemption to encourage fresh buying of insurance policies.
Th FM is likely to make announcements regarding the easing access to credit and capital for MSMEs, alongside tax reforms and compliance relaxations could be expected in the budget
According to Axis Securities, announcements for the BFSI sector are likely to positively impact shares of SBI, BoB, Canara Bank, HDFC Bank and ICICI Bank.
Other stocks such as CreditAccess Grameen, Fusion MFI, Satin Creditcare, Spandana Sphoorty, SBI Life, HDFC Life and ICICI Pru Life are also likely to be positively impacted by the FM's announcement on the infrastructure sector