What the NBFC sector expects from Arun Jaitley's Budget

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posted on 8 years ago — updated on 1 second ago

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Finance Minister Arun Jaitley's Budget speech on February 29 is being awaited with great deal of anticipation. Jaitley is expected to announce a host of measures and also provide incentive to various sectors to fuel the economic growth.

Muthoot Finance Limited is hoping that Jaitley would strengthen the Non- Banking Financial Sector. George Alexander Muthoot, MD, Muthoot Finance Limited has listed out his expectations below:

Key expectations from Union Budget 2016:

1. We envisage that given the significant role played by NBFCs in supplementing the banking industry, the forthcoming budget will strengthen the role of NBFCs in the economy, especially well-run NBFCs with net-worth of more than Rs 5,000 crores.

2. As financial empowerment through financial inclusion is one of the key mottos of the government, we expect that the budget will have measures directed towards reinstating gold loan under priority sector lending as we believe that gold loans can be a useful tool in achieving the objective of Pradhan Mantri’s Jan Dhan Yojana where more than 11 crore accounts have been opened.

3. In addition, as NBFCs, specially gold loan NBFCs, are purveyors of credit to the sectors where credit gap exists and they facilitate the bottom of the pyramid by providing affordable, adequate and timely credit, measures to have a separate strong regulatory body for this sector may be realistic like NHB for Housing finance companies and NABARD for agriculture loan. This will boost the confidence of the investors as well as lenders and NBFCs will be able to raise funds cheaply which will ultimately result in cheap credit to the poor and needy and thereby, playing a crucial role in implementing many initiatives of the government targeted at financial inclusion of the masses.

4. Recently, Service Tax on Money Transfer was introduced by the government which is a deterrent for NRIs who remit their funds to India and we expect that in this forthcoming budget, this may be withdrawn fully so as to encourage non-repatriable fund inflow to the country.