New Delhi, Feb 23, 2015: Mr. George Alexander Muthoot, MD, Muthoot Finance Ltd commented on pre budget expectations
The current government has been very active on accelerating reforms, fast tracking pending project backlog to put economy back on track since it came to power. So this budget we expect a similar pro-growth stance from the government, with focus on not only on forming stronger policies, but more importantly on timely execution of the same, which will results in accelerated growth for the country.
We see the Union Budget focusing more on infrastructure, measures to increase saving to GDP ratio, clear GST implementation roadmap and last but not the least measures to increase capital flow to the country.
The financial inclusion drive being one of the top priorities of the government, NBFCs can play a very instrumental role in achieving the same to ensure viability, scalability and sustainability for all the stakeholders. We want the government to recognise us as an extension of the Indian banking system rather than as shadow banks. Also, we urged the Finance Minister to end the Government’s and the RBI’s step-motherly treatment to the NBFCs vis-à-vis the banks and sought a level-playing field. We appreciate the regulators vision towards issuing payment banks/ Small banks licenses to NBFCs for increasing the financial inclusion but we expect that the government should recognize that there are NBFCs which are bigger in size and wider in reach and thus grant more universal bank licenses to the NBFCs like ours.
From gold financing NBFCs point of view, classify gold loan financing as a priority sector lending (PSL). The PSL recognition will facilitate the banks to finance gold loan NBFCs, reducing their cost of funds and improve the lending rates to customers. We also expect the budget recognise the gold loan in low risk category. Given that gold jewellery provides financial empowerment and can be easily used as an asset even by the poorest in India to secure a financial loan, bias against gold-loan products should be removed.
We request the Finance minister; the service tax on money transfer recently introduced is a deterrent for NRIs to remit their funds to India and may be withdrawn fully to encourage non repatriable fund inflow to the country. At present, ATM interchange fee is Rs.15 per transaction, thus making the business invariable for white label operators and hence we urged the interchange fee be increased to Rs. 20 per transaction. This will encourage putting more ATMs in unbanked areas where by access to the cards issued under Jan Dhan Yogana project is substantially improved.
Thus, the environment with easy lending and easy access to credit and an uncomplicated regulatory mechanism will boost the financial connectivity and pave way to reach deeper interiors of the country.
