Fundingtheunfundednon-bankingfinancecompanies

Measures such as the introduction of tax-efficient zero-coupon bonds for infra debt funds, setup of a professionally managed ‘Development Finance Institution’ with a strong lending portfolio, statutory backing, and Rs 27,000 crore capital infusion as well as the development of a world-class Fintech hub will act as a catalyst in the growth of the NBFC sector and likely unplug potential for last-mile lenders. The setup of an Asset Reconstruction and Management Company for stressed assets to take over bad loans will significantly bring down NPAs, easing the woes of the BFSI sector. The strengthening of the NCLT framework will ensure the resolution of bad loans where the clients can avoid losing their business while continuing to pay the debt.

The e-court system will be set up and an alternate mechanism of debt resolution will follow. With the ease of defaults, financial institutions can then focus on new and productive lending, which will give an impetus to the system. Tightening the grip on bad loans will further credit advancement, helping financial institutions navigate and overcome the prevailing liquidity crunch.

To support NBFCs, the government has proposed to lower the minimum ticket size of Rs 50 lakh for loan eligibility to be recovered under SARFAESI Act to Rs 20 lakhs.

The move will particularly improve collections from the MSME segment. Technology-driven services combined with thoughtful reforms will help improve customer sentiment.