Union Budget 2025: Ease of compliance, decriminalisation of laws among measures proposed to reform financial sector-OxBig News Network

Union Fianance Minister Nirmala Sitharaman addresses the media on Budget at National Media Centre, in New Delhi on February 1, 2025
| Photo Credit: Sushil Kumar Verma

Union Finance Minister Nirmala Sitharaman on Saturday (February 1, 2025) proposed several financial sector reforms to ease compliance, expand services, build robust regulatory environment, promote international and domestic investment, and effect decriminalisation of archaic legal provisions.

For technological advancement in the Banking, Financial Services and Insurance (BFSI) sector, the Minister proposed measures, including allocation of ₹500 crore for a AI centre of excellence and implementation of digital infrastructure for global trade finance.

In her Union Budget 2025-26 presentation, she proposed a light-touch regulatory framework based on principles and trust to ensure productivity and employment.

In a step towards providing a contemporary, agile, people-friendly, and trust-based regulatory framework, she said a High Level Committee for Regulatory Reforms would be set up to review all non-financial sector regulations, certifications, licenses, and permissions.

This committee will suggest measures within a year to strengthen trust-based economic governance and take transformational measures to enhance ‘ease of doing business’, especially in matters of inspections and compliances. State governments would be asked to implement the recommendations at their regulatory authorities for the benefit of the general public.

Investment Friendliness Index of States

Ms. Sitharaman also announced that an Investment Friendliness Index of States would be launched in 2025 to further the “spirit of competitive cooperative federalism”.

Besides, she also proposed to establish a mechanism under the Financial Stability and Development Council (FSDC) to evaluate the impact of current financial regulations and subsidiary instructions and formulate a framework to enhance their responsiveness and development of the financial sector.

To decriminalise more than 100 provisions in various laws, the Finance Minister said she would table the Jan Vishwas Bill 2.0 in Parliament shortly.

Commenting on the likely impact of the Budget on the BFSI sector, Varun Khullar, head (BFSI), LeadSquared, which provides automation tools to BFSI firms, said, “The Budget represents a pivotal development for the BFSI sector, demonstrating India’s dedication to technological advancements and broader financial access.”

He said such measures would create the foundation for improved operational efficiency, enhanced security and greater financial accessibility.

Commenting on the Budget’s focus on the Nyaya Samhita and the Jan Vishwas 2.0 Bill, Ajay Bhargava, Partner, Khaitan & Co, said, “This marks a significant step towards simplifying India’s legal framework.”

“By decriminalising over 100 provisions in existing laws, the government is simplifying legal processes, reducing burden, and fostering ease of doing business in the country. This reform aligns with the broader objective of making laws more accessible and relevant, promoting economic growth while alleviating complexities that hinder operations, particularly for MSMEs,” he added.