NBFCs call for liquidity in Pre-Budget consultation meetings with Finance Minister – ET BFSI

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NBFC’s have once again revived demands for liquidity support from the centre, along with the Reserve Bank of India (RBI). The shadow lenders set forth the demands, during a pre-budget consultation meet with the finance minister, which also include allowing NBFCs to raise liquidity via secured bonds and non-convertible debentures, as well as furthering credit to smaller lenders under the emergency credit line guarantee scheme which was first unveiled as part of the Aatmanirbhar Bharat programme.Demands by NBFCs also include a relaxation on treatment of bad assets, under the Indian Accounting Standards. ““NBFCs are the only players in the financial services, which are required to follow Ind AS accounting system, so a specific guidance note should be issued by the Income Tax department covering various aspects of taxation of NBFCs with respect to Ind-AS,” said Raman Agarwal, co-chairman of the Finance Industry Development Council (FIDC).

NBFC’s have also sought leeway on the practice of deducting 30% tax at source on interest income, and also urged the government to make interest income on doubtful assets to be made taxable on the year of receipt. The non-bank lenders also tabled reintroducing the Interest Subvention scheme of the government, whilst also calling for extending it to Trading and MSME sectors, the latter for whom NBFC’s also batted for a one-time restructuring scheme.

Finance Minister Nirmala Sitharaman started her Pre-Budget consultations with various stakeholders from December 14. The Finance Ministry in a statement said, the consultations, which are held virtually, were kicked off by meetings with top industrialists.

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