New Delhi-based Fintech Non-Banking Financial Company (NBFC) Prest Loans has termed the maiden Budget of Modi 2.0 presented by the new Finance Minister Nirmala Sitharaman as “supportive” for the financial sector in general and the NBFC sector in particular.
“The government has taken steps to bring back confidence in NBFCs. The announcement to bring Housing Finance Companies (HFCs) under Reserve Bank of India (RBI) regulation from National Housing Bank (NHB) is a welcome move which will increase confidence in all stakeholders,” the company’s CEO Ashok Mittal says.
Further, he elaborates, the “unique” step to offer partial first loss guarantee of Rs one lakh crore on good quality NBFC pool portfolio indicating the confidence the government has in the working of NBFCs and their importance in the financial inclusion.
“The Budget 2019 announcement related to the removal of Debenture Redemption Reserve on public bonds issued by NBFCs will help the NBFCs to manage their finances and cash flow better. Further, it also allows NBFCs to pay tax on the interest on NPAs (u/s 43D) on actual receipt basis which will help NBFCs to bring down the operational cost and have a level playing field with banks,” he adds.
One more important announcement in Budget, he points out, is the amendment in the Factoring Regulation Act, by allowing all NBFCs to do factoring activities which will enable more amount availability to the MSME sector. “The budget also focuses on supporting the MSME segment by giving them a 2% interest subvention along with 59 minutes loan approval portal facility.”
Mittal also observes that the finance ministry has taken various steps to empower RBI to take measures to address the current liquidity challenge faced by some large NBFCs in the last few months. “We expect that all the steps and Budget 2019 announcements shall start showing results in the next couple of quarters and we shall see a rebound in the financial sector led by NBFCs, especially focused on MSME funding.”