Business Bureau :
INDUSTRY body Assocham has recommended setting up a refinance window for the NBFC sector and making banks’ lending to non-banking financial companies under priority sector permanent for the upcoming Union Budget. The funding support to the non-banking finance companies (NBFCs) will ensure liquidity in the sector, as they play a key role in financial inclusion and providing affordable financial services to the underbanked, Assocham said in its recommendations to the Government through a pre-Budget memorandum. The Government will present the Budget for fiscal 2022-23 on February 1.
The industry body said that in the past few years the NBFC sector has witnessed a liquidity crunch in the market due to external factors. During such times, the ability to borrow funds at rational pricing became difficult, it added. “A dedicated refinance window for NBFCs directly from the central bank, on the lines of National Housing Bank (which provides refinance to housing finance companies or HFCs) has been a long-standing demand for the NBFC sector,” Assocham said. The Parliamentary Standing Committee on Finance in June 2003 had recommended the setting up of a new refinance institution for NBFCs. In the aftermath of the COVID-19 pandemic that impacted the rural underbanked adversely, the RBI had mandated lending by banks to NBFCs for on-lending to agriculture, MSME and housing to qualify as priority sector lending.