Pre-budget expectations: Quote by George Alexander Muthoot, MD at Muthoot Finance
“While we are cognizant of the challenges that the new covid variants are likely to pose, we are hopeful and optimistic that the measures taken by the Government in the upcoming budget will help give fillip to the nascent economic recovery in 2022. Gold Loan NBFCs tend to play a very integral role in supplementing the banking sector, and catering to the underbanked and underserved segment of the society. The reforms introduced by the Government and the RBI so far have majorly aided the revival of the economy and we believe that it will be important to continue offering this support/sops to the most impacted segments during the pandemic, which includes SMEs, MSME, self-employed, small traders, MFI sector along with supporting the housing segment. During the pandemic, gold loan NBFCs have played a crucial role in meeting credit requirements of the self-employed, MSMEs, women borrowers. Gold loan NBFCs do not get the benefit of priority sector lending (PSL) status, even when the loans are given to the priority sector borrowers. Gold loans are extensively used by farmers, micro-entrepreneurs and shopkeepers for seasonal requirements of working capital or other pressing requirements generally not catered to by the banking system. A large proportion of gold loans go to MSMEs for their short-term working capital requirements. Priority sector status will enable gold loan NBFCs to mobilise additional funds from Banks for on-lending to weaker sections.
We are also in tandem with the recent industry discussions with the honourable Finance Minister regarding setting up a dedicated refinance window for the NBFC sector and making banks’ lending to NBFCs under priority sector be given a ‘permanent’ status in the upcoming budget. An increase in the limits of total priority sector lending by banks would also help the overall sector as it will ensure liquidity support. Since the credit and gold loan demand in the country has also indicated revival signs, we expect recapitalisation of public sector banks to improve their lending capacity and alignment of single exposure limit for banks’ exposure to gold loan NBFCs with that of other NBFCs for greater liquidity flows for taking further exposure towards gold loan NBFCs.”
Quote by Mr. Umesh Revankar, Vice Chairman & MD, Shriram Transport Finance.
“While each wave of the pandemic has brought forth its own set of challenges, we are hopeful and optimistic that the measures taken by the Government in the upcoming budget will help boost the economic recovery in 2022. Considering the slowdown caused by COVID outbreak in India in the past two years, it becomes crucial for the government to prioritize its reforms towards MSMEs and SMEs which have been one of the most impacted sectors and thus enable them to stay afloat in 2022-23. The MSMEs are responsible for the creation of more than half of the employment opportunities in the country. We believe that facilitating concession in GST rates from 18% to 12%, tax free export income and subsidized interest rates will aid the sector and also empower them to compete in international markets. Regarding RBI’s recent clarification on stamping NPA (non-performing assets) on their due date, we think that the government should take a more relaxed approach to enable SMEs to get back to business rather than tightening norms now.
Over the next couple of quarters, we envisage that as the economy starts to recover we will see demand revival. We expect the Government to continue to spend on Infra and as the Government spending on developing infrastructure picks up, we expect this will lead to pick up in CV demand in the upcoming quarters. We also seek maximum allocation of infrastructure funds assigned in the ‘Gati Shakti Initiative’ launched by the honorable Prime Minister which will enable NBFCs to achieve our ‘Make in India’ plans. This increase in government expenditure on infrastructure will lead to a surge in credit demand that will further enable NBFCs to flourish and impact the overall economy.
One of the other areas we are expecting in the FY23 Budget is initiatives around expansion in availability of CNG and CNG stations across the country. Although the government has envisioned a noble cause by introducing clean fuel norms that has seen interest from people shifting to Compressed Natural Gas (CNG), however the inability to establish the required number of stations are leaving the vehicle owners in the lurch. Increased investments towards easy accessibility of CNG and CNG stationswill positively impact the demand for new vehicles.”
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