Hope for long-term solution to liquidity needs of NBFCs, says Raman Aggarwal, Finance Industry Development Council
Long-term solution to liquidity needs of NBFCs and harmonising taxation and recovery provisions of NBFCs with that of banks and other FIs are two key reforms the industry will look forward to in the Budget
January 05, 2021 / 14:51 IST
Photo by rupixen.com on Unsplash
For the upcoming Budget 2021, Raman Aggarwal, Co-Chairman, Finance Industry Development Council says: "Fundraising has been an area of concern for the NBFC sector over the years, especially, for a large number of small NBFCs. The situation turned even more challenging after the COVID-led lockdown. While government and RBI have taken steps to address the issue, the challenges continue. The need is to tweak schemes like Partial Credit Guarantee scheme to include term loans, allow NBFCs to issue secured bonds “on tap” and incentivise banks to lend more to NBFCs. Need to harmonise taxation and recovery provisions of NBFCs with that of banks & FIs - There has been a lot of talk on tightening of NBFC regulations to 'harmonise' it with that for banks. However, 'harmonising' provisions relating to Income Tax and Recovery are often missed out. Issues like TDS exemption on interest income and parity on tax deduction on provisions made for NPAs continue to haunt NBFCs. Further, NBFCs are the only financial services players that follow Ind AS, but there is lack of clarity on taxation of “notional income” as calculated under Ind AS. To enforce security interest under The SARFAESI Act, NBFCs are subject to a minimum threshold of Rs.50 lakh ticket size, which is arbitrary and imprudent."
Raman Aggarwal is Co-Chairman, Finance Industry Development Council
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