NBFC crisis may have reached a plateau; things to get better hereon, says FM Sitharaman

Fresh off her maiden Budget presentation in Parliament, Finance Minister Nirmala Sitharaman in an exclusive interaction with CNBC-TV18 said Budget 2019 should kick-start the virtuous cycle of investment.

On the crisis-hit non-banking financial companies (NBCFs), Sitharaman said decisions to help the sector would be taken after consultation with experts. “For NBFCs which have a problem of liquidity, we have made liquidity available. We have also taken steps to address problems related to governance and regulation,” she said.

She also said that the RBI has been given powers to resolve the issues if NBFCs are unable to handle the situation by themselves. She said the RBI was working  with the government to resolve the crisis. Sitharaman acknowledged that while the crisis is not over, it ‘may have reached a stage where it would plateau and then improve’.

The Finance Minister hoped normalcy in the NBFC sector would be restored in six to seven months.

On providing capital for public sector banks (PSBs), Sitharaman said they did not want half-hearted measures.

“Rs 70,000 crore sends a clear message. Banks will have to be leaner and meaner by using technology to provide better service quality,” she added, referring to the Budget allocation .

When quizzed about the allocation criterion, Sitharaman stated, “at present, we are not looking at any other criteria except merit to allocate recapitalisation funds.”

Sitharaman said the Cabinet Committee on Economic Affairs’ (CCEA) list of companies for divestment would be out soon. She said that keeping sectoral limitations in mind, the respective ministers would have to consult their stakeholders before deciding on how the divestments take place.

“The divestment target would be realistic. Air India is not a part of the CCEA’s cleared list,” she said adding that lessons learnt from the previous ‘non-starter’ attempt would guide the next stake sales push.

Commenting on her view of India Inc as nation builders Sitharaman said, “If companies have an agenda to grow with India, why do we have to hesitate? The issues that India Inc faces with respect to Ease of Doing Business will be addressed, but wrong-doers cannot be allowed to get away.”

“If you’re earning wealth in India, you should contribute to the government’s flagship programmes. There has to be a balance between rights and duties,” she reiterated, adding that the hike in cess on the high-income bracket should not be taken negatively.

On investments, Sitharaman remained positive that public investment in infrastructure would not only continue, but also expand to include more than roads and airports.

On the Centre’s Direct Benefit Transfer (DBT) scheme, the Finance Minister said that benefits would have to reach ‘the nooks and crannies of India’.

Sitharaman was also positive that the upcoming festive season and a good monsoon would help improve consumption  in the country.