The Union Budget Policy Regarding the Banking Sector 2025

Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-9(I) | Sept - 2025 238 The Union Budget Policy Regarding the Banking Sector 2025 Dr. Varsha Rameshwar Bhutada1, Mr. Amol Prakash Rao Karpe2 Dept. Of Commerce, ACS College, Ganache Manuscript ID: JRD -2025(I)-170953 ISSN: 2230-9578 Volume 17 Issue 9(I)| Pp. 238-240 Sept. 2025 Submitted: 9 Aug. 2025 Revised: 20 Aug. 2025 Accepted: 20 Sept. 2025 Published: 30 Sept. 2025 Abstract The Union Budget 2025 places strong emphasis on three strategic pillars for the banking sector—expanding financial inclusion, accelerating digital transformation, and strengthening priority sector lending. This study evaluates the role of these budgetary measures in shaping banking operations in Maharashtra, a state with a unique dual structure of advanced urban financial hubs and extensive rural cooperative networks. Using a descriptive and analytical approach, the research examines policy initiatives such as PM SVANidhi enhancement, UPI-linked credit cards, CBDC expansion, and increased credit guarantees for MSMEs, alongside their implementation challenges. Findings reveal that while urban banks are well-positioned to adopt digital innovations, rural cooperative institutions face persistent barriers related to infrastructure, skills, and regulatory complexity. The study concludes that bridging the urban–rural divide will require targeted investments in infrastructure, skill development, and streamlined regulations to ensure equitable benefits across the state’s diverse banking ecosystem. Keywords: Union Budget 2025, banking sector, Maharashtra, financial inclusion, digital banking, priority sector lending. Introduction The Union Budget serves as a critical policy instrument shaping India’s economic direction. In 2025, the budget’s provisions for the banking sector emphasise three strategic pillars: expanding financial inclusion, accelerating digital banking, and strengthening priority sector lending. These measures aim to enhance access to formal finance, improve service efficiency, and channel credit towards productive sectors. Maharashtra government has with its dual system of advanced urban banking in Mumbai and extensive rural cooperative networks, offers a unique case for evaluating budgetary impacts. However, translating budget policy into measurable outcomes often encounters operational and infrastructural challenges, especially in rural regions. Government plans for annually which known as Union Budget of India is the government’s yearly plan for how it will earn and spend money. It also decides policies for different sectors, including banking. For banks, the budget is not just a financial report—it guides how they give loans, manage their funds, and support economic growth. Announcements like adding capital to public sector banks (PSBs), changing lending rules, giving tax benefits, and starting financial inclusion programs, all directly affect how banks work Banks are important for the economy because they collect savings from people and businesses and give loans for different needs. In recent years, Indian banks have faced challenges such as dealing with unpaid loans (NPAs) and moving towards more digital and technology-based systems. The Union Budget has tried to help by providing funds to banks, improving liquidity, and creating special loan schemes for micro, small, and medium enterprises (MSMEs). Quick Response Code: Website: https://jrdrvb.org/ DOI: 10.5281/zenodo.16885235 Creative Commons (CC BY-NC-SA 4.0) This is an open access journal, and articles are distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International Public License, which allows others to remix, tweak, and build upon the work noncommercially, as long as appropriate credit is given and the new creations ae licensed under the idential terms. Address for correspondence: Dr. Varsha Rameshwar Bhutada, Dept. Of Commerce, ACS College, Ganache How to cite this article: V. R. Bhutada, A. P. Karpe. (2025). The Union Budget Policy Regarding the Banking Sector 2025.Journal of Research & Development, 17(9(I)),238-240 Original Article Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-9(I) | Sept - 2025 239 Maharashtra is one of India’s most important states for banking. It has Mumbai, the country’s financial capital, and also many rural cooperative banks that serve farmers and small businesses. This mix of urban and rural banking makes Maharashtra a good place to study how budget decisions affect banks. However, most research focuses on the whole country and not on specific states like Maharashtra.Objectives of the Study 1. To assess the role of the Union Budget in supporting financial inclusion, digital banking, and priority sector lending. 2. To study the specific effects of Union Budget policies on the banking sector in Maharashtra, considering both urban financial hubs and rural cooperative banking networks. 3. To identify the challenges faced by banks in implementing Union Budget provisions at the operational level. Research Methodology This study adopts a descriptive and analytical research design to examine the impact of Union Budget 2025 policies on the banking sector in Maharashtra, with a specific focus on financial inclusion, digital banking, and priority sector lending. Union Budget documents, Reserve Bank of India reports, NABARD publications, state-level banking statistics, and scholarly articles from peer-reviewed journals. Policy make in the Union Budget 2025-2026 in the banking sector 1. Financial Inclusion Initiatives • PM SVANidhi Enhancement: The budget raised the maximum loan limit for street vendors to ₹50,000, integrating digital repayment incentives. • Rural Banking Infrastructure: Allocations were made to expand brick-and-mortar bank branches in 150 unbanked blocks, many in Maharashtra’s Vidarbha and Marathwada regions. • Jan Dhan Integration with Insurance & Pension Schemes: Enhancements in PMJJBY and PMSBY were linked with bank accounts to deepen financial safety nets. 2. Digital Banking Push • UPI-linked Credit Cards: Introduction of micro-credit facilities capped at ₹30,000 for low-income households via UPI integration. • CBDC Expansion: The RBI’s digital rupee pilot is being extended to targeted rural locations, aiming to reduce cash dependence. • Low-Bandwidth Banking Apps: Designed for feature phones, these apps enable secure digital transactions in areas with poor connectivity. 3. Priority Sector Lending • MSME Credit Guarantee Scheme: Guarantee limits for micro and small enterprises doubled to ₹1 crore and ₹2 crore respectively, with lower guarantee fees to encourage bank participation. • Agriculture & Rural Credit Targets: NABARD refinance facilities increased, targeting ₹20 lakh crore in rural lending for FY 2025–26. • Affordable Housing Credit: Extended interest subvention for EWS and LIG categories under PMAY. Effects on the Banking Sector in Maharashtra 1) Urban Banking Impact Mumbai-based banks are well-positioned to adopt advanced digital platforms, benefiting from budgetary tax incentives and infrastructure grants. Private Banks in the state have already begun pilot projects for block chainbased loan processing. 2) Rural and Cooperative Banking Impact Cooperative banks in Vidarbha and Marathwada stand to benefit from increased priority sector funding. However, digital adoption in rural branches remains slow due to connectivity gaps and lack of trained personnel. 3) Challenges in Implementation Infrastructure Gaps: Rural areas in Maharashtra face poor internet connectivity, limiting digital banking adoption. • Skill Shortages: Cooperative bank staffs are generally are not skilled in the sense of cyber security with also AIbased systems. • Regulatory Complexity: Overlap between state cooperative laws and national banking guidelines delays policy rollout. • Credit Risk Management: Expanded priority sector lending without adequate risk assessment can increase NPAs. Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-9(I) | Sept - 2025 240 Conclusion The Union Budget 2025 reinforces the government’s vision of inclusive, technology-driven banking while prioritizing financial access and targeted lending. In Maharashtra, urban banks, particularly in Mumbai, are wellpositioned to leverage initiatives like UPI-linked credit and block chain-enabled processing, benefiting from advanced infrastructure and skilled manpower. Rural cooperative banks, though supported by increased credit allocations and infrastructure expansion, face persistent challenges in connectivity, digital adoption, and regulatory alignment. Bridging this urban–rural divide requires focused investment in rural banking infrastructure, skill development, and simplified regulatory processes. Only through such targeted interventions can budgetary provisions translate into tangible improvements across the state’s diverse banking landscape. Ultimately, sustained growth will depend on coupling innovation with institutional capacity-building, ensuring equitable benefits for both advanced urban institutions and grassroots rural networks. References: - 1. Government of India. (2024). Union Budget 2024-25: Key Highlights. Ministry of Finance, Department of Economic Affairs. Retrieved from https://www.indiabudget.gov.in 2. Reserve Bank of India. (2023). Report on Trend and Progress of Banking in India 2022-23. Retrieved from https://www.rbi.org.in 3. Ministry of Finance. (2021). Economic Survey 2020-21. Government of India. Retrieved from https://www.indiabudget.gov.in/economicsurvey/ 4. Ghosh, S. (2021). Banking sector reforms in India: An overview. Indian Economic Review, 56(2), 151–175. https://doi.org/10.1007/s41775-021-00018-x 5. Acharya, V. V. (2017). The Quest for Restoring Financial Stability in India. SAGE Publications India. 6. Bhattacharya, H. (2020). Public Sector Banks and Financial Inclusion: An Indian Perspective. International Journal of Financial Studies, 8(3), 45. https://doi.org/10.3390/ijfs8030045 7. NITI Aayog. (2022). FinTech and Digital Banking: India’s Emerging Growth Engines. Retrieved from https://www.niti.gov.in 8. Rani, R., & Kumar, P. (2019). Impact of Union Budget on Indian Banking Sector: An Analytical Study. International Journal of Research and Analytical Reviews, 6(2), 760–765.