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NBFC liquidity, NPAs figure in Sitharaman's pre-Budget meet

IANS  |  New Delhi 

Minister Nirmala Sitharaman's pre-Budget consultations with financial and capital market stakeholders on Thursday discussed creation of a dedicated liquidity window for non-companies (NBFCs)sector, review of interest rates on Small Savings Schemes and banks' non-performing assets (NPAs or bad loans), among other issues, an said.

A Ministry statement also said that capital infusion in public sector banks (PSBs) and a separate bond exchange were among the other issues discussed.

Leading PSBs as well as NBFCs gave a number of suggestions for infrastructure financing, tax benefits for encouraging MSME investments, increasing liquidity in the system, tackling NBFCs' issues and deepening the bond market.

"Lot of suggestions have come regarding infrastructure financing, reviving the and what tax benefits can be given for encouraging investments in MSMES. Lot of representation was also there from NBFCs," State of India (SBI) told reporters after the meeting.

Punjab National (PNB) said: "I think liquidity is not a major challenge right now. NPAs are not an issue of the Budget".

said: "We suggested some tax alignments between section 43B and rule 3EA of the Income Tax act. As per RBI rules, we can only book the interest income within 90 days, but as per rule 3EA, six months accrued interest is also accounted...so there should be some alignment on that."

"We discussed how to enhance the corporate bond market. At present, invest through mutual funds. If some tax benefits can be extended to also just like it has extended to mutual funds, they would benefit and corporate bond market can be extended.

"There are issues regarding solvency and liquidity. In case of only liquidity issues, some market window could be opened to make funds available..it has to be seen on a case by case basis. Solvency related issues have to be handled seperately," he added.

"On the NBFC Sector, the stakeholders said there is a need to distinguish b etween solvency, governance. The liquidity issues were also discussed along with creation of dedicated liquidity window for NBFC sector, review of interest rates on Small Savings Schemes, review of NPAs provisions through setting-up a Committee came up during the three hour deliberations,m" the statement said.

"Incentivising agricultural marketing, setting-up of Debt Exchange Traded Fund, domestic capability building in audit and rating, making available for MSME sector too was detailed in the exchanges," it said.

Major stakeholders of financial sector and capital markets participated in the meeting including Reserve of India (RBI) N.S. Vishwanathan, the statement added.

--IANS

ana/sn/bc

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, June 13 2019. 16:18 IST
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