With the upcoming Union Budget 2024, there's great anticipation for measures to boost the rural economy and drive public capex for a robust cyclical recovery. As we continue to see stability in the government, we believe the Budget will balance the needs of salaried individuals, farmers, women, and youth.
The NBFC sector is hopeful for exemptions, liquidity support, and other measures that align with the vision of 'Viksit Bharat@2047'. Key expectations include:
- Recognizing Gold Loan NBFCs Under Priority Sector Lenders: Rural India holds a significant portion of the nation's gold, which remains untapped. Recognizing gold loans under ?50,000 as priority sector lending can unlock this potential, providing cheaper credit for productive activities.
- Introducing Gold-Linked Credit Line via UPI: Allowing NBFCs to offer UPI-linked credit lines against gold jewelry can revolutionize credit access, benefiting small businesses and rural citizens by providing instant, secure, and convenient credit.
- Aligning Exposure Limits for Gold Loan NBFCs: Aligning single counterparty exposure limits with other NBFCs will enable gold loan NBFCs to extend more credit, particularly in semi-urban and rural areas where such loans are often the only credit source.
- Removing TDS on Listed NCDs by NBFCs: Eliminating TDS on listed debentures will simplify the investment process, enhance market liquidity, and attract more retail investors, making them stakeholders in India’s corporate growth.
- Offering Higher Interest Rates to Retail Investors in NCDs: Allowing NBFCs to offer differential interest rates to retail investors will make NCDs more attractive, especially for senior citizens and pensioners relying on fixed-income investments.
The Union Budget 2024 is a crucial opportunity to implement reforms that will create a robust, diverse, inclusive, and empowering financial ecosystem. NBFCs will play a vital role in extending last-mile financial services as we work towards a $5 trillion economy.
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