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Budget 2021: Expectations of NBFCs sector

Before the Finance Minister Nirmala Sitharaman presents the Union Budget in the Parliament on February 1, 2021.

Here’s what the NBFCs sector expects from Finance Minister Nirmala Sitharaman:

Mr. Ondrej Kubik, CEO, Home Credit India:

“We are looking forward to a progressive budget as the country looks to recover from the disruption caused to the economy by the pandemic.

Being the backbone of the economy, the Financial Sector will be key in giving a boost to the economy while setting the demand back on track.

An important aspect will be to improve liquidity and performance of the Non-Banking Finance Company (NBFC) sector, in the form of some relief such as Exemption to NBFCs from thin capitalisation norms (Section 94B), Taxability of interest income on doubtful assets in the year of receipt and Increased limit for deduction of provision for doubtful debts.

Further a partial credit scheme 2.0 too can be a beneficial step in aiding the Liquidity.”

Mr. Sameer Aggarwal, Founder & CEO, RevFin:

“We expect the Budget for FY2022 to enable the EV industry to grow and become one of the largest contributors to the GDP. For the industry, the biggest challenges are access to credit and the cost of credit. Therefore, it is now time to make credit available in the market through budgetary intervention. 

To support this, a debt fund should be created at low-interest rates to provide to all financial institutions lending in the space and synergies to be created for public sector banks to collaborate with fintech platforms for delivery of loans for EVs. 

One other measure to increase credit supply is to make capital more accessible to NBFCs, including those that are not highly rated. This is crucial for smaller and newer NBFCs, that are providing finance to individuals and small businesses. 

Ideally, the government should create a guarantee scheme for banks to lend to such NBFCs, ensuring protection for the banks.  A structure will need to be created for providing loans to such NBFCs, which can be uniformly followed without the fear of making incorrect decisions.”

Mr. Ram Kewalramani, Co-founder & Managing Director, CredAble: 

“After a cataclysmic 2020, India looks forward to innovative and robust support from the Govt of India in form of various incentives, tax cuts, subsidies, access to credit to essentially battle and cope with the cascade effect of the brutal pandemic, which many are still reeling under. 

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When it came to public knowledge that this year’s Budget will be paperless and presented digitally, the words of FM “This will be unlike anything in the past 100 years” truly raised expectations. 

Liquidity is a lifeline in tough times like these and more so in 2021. Thus it is expected that budget 2021 will enable and incentivize NBFCs, startups in the space of lending especially in the areas of working capital financing, as well as tech and non-tech financial institutions structurally because this ultimately turns the economic wheels largely.”

Mr. Rohit Garg, Co-Founder & CEO, SmartCoin:

“We expect the budget for FY2022 to outlay liquidity and guarantee schemes which can help in increasing the credit supply and help to make capital more accessible to NBFCs. 

We are anticipating the NBFC sector to grow at a moderate rate and are hoping that the sector also gets fresh funding to support the moderate growth in the coming year. 

From the Budget 2021, we look forward to the government to promote more banks and larger NBFCs to partner with new-age NBFCs/fintech who are providing credit to those who are not served by banks. 

We also propose partnerships with established banks, NBFCs with fintech players which will create an environment receptive towards initiatives such as Sahmati- account aggregator, OCEN, etc. 

With the constant technological advancements in the Fintech Industry, we look forward towards the government to simplify legacy complex processes, as recently the adoption of video KYC has been a welcome move and can be rolled out across different financial services”

Mr. Sunoor Kaul, Co-Founder & Director, Origo Commodities:

“In the Budget 2021-2022, there is a need to focus on the infrastructural issues that exist in the agricultural sector. There are a few large gaps in this context vis-a-vis warehouses, silo storages, and related infrastructure. 

The government has to pay attention to the entire agricultural value chain for enhancing productivity and reducing post-harvest losses. 

Loans to the agricultural sector via NBFCs should also be classified as Priority Sector Lending (PSL) credit. At present, though bank lending to the segment is considered as a PSL credit, it is not the case for onward lending via NBFCs. 

Furthermore, there is a deficit of $95 billion prevailing within the segment. To promote agri-investments as an asset class, we have to unlock liquidity by increasing investor involvement in the agricultural supply chain. 

A good way to do it will be to relax income and capital gains taxes for Agri instruments such as Pass-Through Certificates (PTCs) and other modes of securitization. Doing so will empower more retail investors to participate in the domain.”   

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