NBFCs push for refinancing, tax reliefs at pre-Budget meeting with FM

NBFCs and FIDC urged the Finance Minister to create a refinancing window, widen SARFAESI provisions and ease tax deductions during pre-Budget consultations for 2026-27

Non-banking finance companies (NBFCs) and their representative body, the sector’s Self Regulatory Organisation (SRO), the Finance Industry Development Council (FIDC), on Wednesday requested tax relief and pressed for a long-pending demand for a dedicated refinancing window during their meeting with Finance Minister Nirmala Sitharaman, according to sources.

 

Participants stressed the need for a dedicated refinancing mechanism for NBFCs that will provide continuous liquidity support.

 

“Overall the focus of the meeting was on boosting liquidity, improving credit flow. A demand to create a dedicated refinancing window to increase lending of NBFCs to MSME sector,” said a person aware of the development. The participants urged the creation of a dedicated refinancing window on the lines of the National Housing Bank for the sector.

 

Why are NBFCs pushing for a refinancing mechanism? 

The NBFC officials requested that SARFAESI provisions be fully extended to the sector, just as they are for banks. At present, these provisions apply only to NBFC loans above Rs 20 lakh, which limits their usefulness in asset recovery.

 

“A major demand from NBFCs was the reduction of the minimum loan threshold under the SARFAESI Act, from the current Rs 20 lakh to Rs 1 lakh.”

 

What tax concerns did NBFCs raise in the meeting? 

NBFCs also urged the government to remove the TDS applied on each repayment they receive, saying the deduction creates avoidable financial and operational strain.

 

This is the seventh in a series of pre-Budget consultations that the Ministry of Finance conducts annually before finalising the Budget 2026–27.

 

The meeting was also attended by Union Minister of State for Finance Pankaj Chaudhary, Secretary of the Department of Economic Affairs Anuradha Thakur, Chief Economic Adviser V Anantha Nageswaran and other senior officials. 

"We have asked for a dedicated refinance window for NBFCs similar to NHB. Notify NBFCs for deduction in taxable income under Section 80E on interest for education loans, Exemption from TDS on interest income under Section 194A, similar to banks and financial institutions and reduction of the minimum loan threshold under the SARFAESI Act, from the current Rs 20 lakh to Rs 1 lakh as available to banks,” said Mahesh Thakkar, Chairman, FIDC.