Budget 2026 Impact: Banking and NBFC Stocks React to Policy Changes

The Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, has delivered a mixed reaction in the stock market, with significant impacts across sectors. Budget allocation changes, policy reforms, and tax measures impact various industries. Here’s a detailed look at how the budget has influenced the ‘Banking’ sector: 

Budget Allocation Snapshot

This table gives you a quick comparison of government spending relevant to the sector across the previous financial year and the current budget year: 

Banking Sector Budget Allocation (FY 2026-27)

The Union Budget 2026 places strong reliability of the Banking and NBFC ecosystem to support Viksit Bharat. While direct allocation figures are spread across multiple heads, the focus remains on structural reforms, credit expansion, and institutional efficiency rather than standalone spending. 

Key Announcements in the Banking Sector

• A high-level committee on banking for Viksit Bharat will be set up to comprehensively review the sector and coordinate with India’s next phase of economic growth. 
• The committee will ensure reforms safeguard financial stability, promote financial inclusion, and boost consumer protection
• The Budget outlines a structured roadmap for NBFCs under Viksit Bharat, with clear targets for credit disbursement and technology adoption. 
• NBFCs are expected to play a larger role in expanding credit access, particularly in underserved segments. 
• As a first step towards achieving scale and efficiency, the government proposes restructuring Power Finance Corporation (PFC) and Rural Electrification Corporation (REC). 
•  These measures reflect the government’s intention for long-term structural reforms rather than short-term interventions in the banking and NBFC sectors. 

Comparison with the Previous Year

Compared to last year, the Union Budget 2026 shows a strategic shift from the previous focus towards current focus. While FY26 focused largely on capacity expansion, incentives, and demand support through various policy measures, the FY27 allocation highlights the government’s intent to build long-term efficiency, competitiveness, and sustainability within the Banking sector. The focus has moved towards structural reforms, improved governance, technology adoption and financial stability and NBFCs.  

Capital Expenditure & Multiplier Impact 

A capex outlay of ₹12.2 lakh crore has been proposed in the Union Budget 2026, expected to create a strong multiplier effect across all industries, and higher capital spending is likely to support loan growth, asset quality improvement, and higher credit uptake for banks and NBFCs. Higher capex will increase demand for credit and financial services, and banks may see higher growth and project financing opportunities for public investment. 

Impact on Industry & Market Sentiment

Market players have received the Budget announcements in the agricultural sector positively. Experts believe the increased allocation and announced changes may help agricultural players achieve greater revenue visibility and margins in the medium term.

The sectors expected to benefit the most from the policy thrust include banks. It will be seen as a positive impact for credit growth, clarity on banking reforms, credit expansion targets, and NBFC restructuring. With higher capex across sector, banks may see increased credit demand and growth opportunities, indirectly supporting lending volumes and revenue potential. 

Key Stocks Will Perform Well in the Banking  Sector 

The Union Budget 2026 provides a boost to credit growth, NBFC reforms, and public sector bank efficiency, which is expected to positively impact banking stocks.

Public Sector Banks (PSBs)

• State Bank of India (SBI)
• Punjab National Bank (PNB)
• Bank of Baroda (BoB)

Private Sector Banks 

• HDFC Bank
• ICICI Bank
• Axis Bank

NBFCs & Financial Services Companies

• Power Finance Corporation (PFC)
• Rural Electrification Corporation (REC)
• Shriram Transport Finance 
• Bajaj Finance  

Support for Banking s, Startups & Employment 

The Union Budget 2026 continues its focus on Banking s and startups within the Banking Sector through targeted credit support, incentives, and stabilisation. These measures are expected to generate employment across skilled and semi-skilled categories while strengthening the sector’s supply chain.

Focus on National Development: Union Budget 2026

As the government’s initiatives in the agricultural sector reflect its development priorities, they include Atmanirbhar Bharat, Make in India, Digital India, and Green Growth. The government’s main aim is to efficiently utilise resources and promote sustainable growth to accelerate innovation across all sectors. Overall, the Budget focused on the sectoral growth for national development, while creating employment and strengthening infrastructure. 

Execution Remains the Key on Union Budget 

However, according to experts, the implementation process must be effective. This will ensure that the time taken for the release of funds and the coordination between the central and state governments do not hamper the effectiveness of the announced initiatives in the Union Budget 2026.

External factors, such as {{Global Economic Trends / Commodity Prices / Interest Rates}}, could also affect the sector’s performance in FY27.