Budget 2019: A confidence boost for NBFCs, says L&T Finance MD & CEO

This is a pragmatic and realistic Budget. The reduced tax burden on companies with an annual turnover of up to Rs 400 crore will augment investible surplus in the economy. Start-ups have been provided various tax incentives. In particular, relaxation of conditions to offset their losses will encourage entrepreneurial spirits. 

Dinanath Dubashi, MD & CEO L&T Finance

The Budget has also taken several measures to reduce risk aversion and increase lending to NBFCs. Measures like one-time partial six-month guarantee to public sector banks (PSBs) to buy loans of sound NBFCs and higher recapitalisation of PSBs are praiseworthy. Also, higher regulatory powers to the Reserve Bank of India over NBFCs and bringing housing finance companies under the banking regulator will restore the confidence for well-governed NBFCs. 

The policy thrust on providing parity between scheduled banks and NBFCs in their tax treatment is a welcome move. Moreover, doing away with the need to maintain debenture redemption reserve for public issuance of bonds will unlock capital for NBFCs. The Rs 70,000-crore recapitalisation of PSBs will provide them growth capital, which should also help fundamentally stronger NBFCs. Additionally, tax incentives for buyers of affordable housing and the proposed model tenancy law are positives for the struggling real estate sector.