NEW DELHI: Better liquidity crisis, strong recovery laws, tax incentives to retail investors and a dedicated liquidity window for non-banking financial corporations (NBFCs) are some of the incentives that the financial and capital market is seeking from the government in the upcoming budget.
In her third day of pre-Budget consultations on Thursday, Finance Minister Nirmala Sitharaman met representatives from the financial and capital market. According to the officials in finance ministry they discussed creation of a dedicated liquidity window for the NBFC sector. Bankers have also asked the government to review interest rates on Small Savings Scheme.
Earlier some of the bankers, including Uday Kotal, had said that better interest in the small saving scheme is shifting investers interest towards debt schemes.
“Lots of suggestions have come regarding infrastructure financing, reviving the economy and what tax benefits can be given for encouraging investments in MSMES. Many representation was also there from NBFCs,” said SBI Chairman Rajnish Kumar.
During the three-hour meeting, suggestions on review of banking NPAs provisions through setting-up a committee also came up. Separately, bank unions also gave their recommendation to the minister.
The Indian Banks’ Association said a system must be evolved to ensure accountability and responsibility on the part of senior management of state-run banks who are involved in credit sanctions and of the loans became NPAs within one year. They also requested the government to enact strong recovery laws with a provision to confiscate personal assets of directors of defaulting companies. The capital market respresentative suggested setting-up of Debt Exchange Traded Fund and rationalisation of various taxes like Security Transaction Tax.
Insurance Regulatory and Development Authority of India chairman Subhash Chandra Khuntia suggested additional tax incentives for term plans to encourage investments, like in the case of the National Pension Scheme.