“From the 2021-22 Union budget, we look forward to pro-growth policy announcements that will steer our country’s growth to its true potential in the coming years,” says George Alexander Muthoot, MD, Muthoot Finance.
Gold loan NBFCs have played a systemically-crucial role in helping make the MSMEs and individuals Atmanirbhar through quick & easy finance in the tough pandemic year to support recovery, stabilise their businesses and drive growth. Gold loan NBFCs need to be viewed distinctly from other NBFCs as the former are providing loans as small as Rs. 1500 to the common man and helping the economy by monetising idle gold lying in the households-he adds.
We would expect a fair & growth-friendly regulatory environment to serve the needs of customers better and faster as vast sections of our population still experience difficulties in borrowing from other channels. To ensure a level-playing field, discriminatory LTV rate between banks and gold loan NBFCs should be done away with, there should be parity in counterparty exposure limit as well as in branch licensing policy between banks and gold loan NBFCs.
Some other places where equitable treatment is required are in exempting NBFCs from TDS on interest income earned as is already the case with banks currently and allowing gold loan NBFCs to give loan against gold coins as banks are also permitted to do so against gold coin of up to 50 grams.
Lastly, a permanent NBFC refinance window from RBI or from a designated existing institution/creation of a new institution as the backstop for NBFCs would quell the concerns of most lenders and investors with NBFCs now accounting for a sizeable 20-25% credit exposure in the country making them systemically important in their role and function.”