Seek level playing field for NBFCs: Srei Infra

Srei Infrastructure today said it is seeking modifications in the Usha Thorat committee report draft guidelines on non-banking finance companies (NBFC) and asked for extension of the benefits of SARFAESI Act to the sector for a level playing field vis-a-vis banks.

"We ask for level playing field. The Usha Thorat guidelines propose to bring NBFCs under similar guidelines which govern banks but NBFCs do not get advantage of the SARFAESI Act," Srei Infrastructure Finance Limited chairman and managing director Hemant Kanoria told PTI.

"Such attempts would not be able to yield the desired results until and unless NBFCs too have the benefit like SARFAESI Act, nil TDS, tax provisions pertaining to NPA deduction and easy access to ECB," he added.

Kanoria emphasised on expediting infrastructure investment through Asset Finance Companies (NBFC-AFCs) and Infrastructure Finance Companies (NBFC-IFCs).

Finance Industry Development Council, the industry body for NBFCs, was reportedly in favour of bringing in certain relaxation and modification in the draft report placed recently.

The proposed guidelines asks NBFCs to classify any loan as an NPA to 90 days from 180 days, but without coverage under SARFAESI Act, Kanoria said, adding it would severely hit NBFCs.

He said large NBFCs whose net worth was above Rs 1,000 crore should be encouraged to accept public deposits to reduce their dependence on bank credit.

NBFCs had also demanded extension of benefits of NBFC-IFCs for external commercial borrowing to NBFC-AFCs, Kanoria said.

The Usha Thorat committee report on NBFC has set the ceiling for tier-I or equity capital at 10 per cent from the existing 7.50 per cent.

Industry players have argued that they could think of hiking tier I capital after two-three years by when market would turn more conducive.