NBFC liquidity, AIFs figure in FM’s pre-Budget meet with financial sector
New Delhi: Ahead of the Union Budget, top officials from banks, insurance companies, Non-Banking Financial Companies (NBFCs) had sought an urgent solution for the liquidity crisis surrounding NBFCs and to improve banks’ ability to lend.
“The main areas of discussion during the meeting included issues relating to the capital markets, financial sector, Non-Banking Financial Companies (NBFCs) and Alternative Investment Funds (AIFs), among others,” the Finance Ministry said in a statement.
The representatives suggested capital infusion in regional banks, review of interest rates of the government’s small savings schemes, creation of dedicated liquidity window for NBFCs.
The financial market players on Thursday met finance minister Nirmala Sitharaman in the pre-Budget meeting, putting forward their suggestions and demands. Sitharaman is expected to present the budget on 5 July.
Besides, the industry suggested setting up of debt exchange traded fund, provisions to ease liquidity pressures created due to insolvency, rationalization of various taxes like security transaction tax in capital market, setting-up of a separate bond exchange and to make corporate tax progressive to incentivize small medium-sized companies.
“Lot of suggestions have come regarding infrastructure financing, reviving the economy and what tax benefits can be given for encouraging investments in MSME, exports,” SBI Chairman Rajnish Kumar said.
Managing Director and Chief Executive Officer of IDBI Bank Rakesh Sharma, who was also present at the meeting, said that there was a discussion on how the corporate bond market can be enhanced.
“At present retail investors invest through mutual funds. If some tax benefits can be extended to retail investors also just like it has been extended to mutual funds, they would benefit and corporate bond market can be extended,” Sharma said.
Minister of State (MoS) for finance Anurag Thakur, finance secretary Subhash Chandra Garg, expenditure secretary Girish Chandra Murmu, revenue secretary Ajay Bhushan Pandey, financial secretary Rajeev Kumar, among others were present at the meeting.
Reserve Bank of India (RBI) Deputy Governor N S Vishawanathan, Life Insurance Corporation of India Chairman T C Suseel Kumar, Securities and Exchange Board of India whole time member G Mahalingam, Chairman of Edelweiss Finance Rashesh Shah, were among the stakeholders who attended the meeting in New Delhi.
Stakeholders from infrastructure and climate change sectors also met Sitharaman as part of the pre-Budget meeting. Issues pertaining to bringing more capital to the infrastructure sector such as highways, railways, telecom, automobiles, which included incentives for electric vehicles, were discussed.