Raman Aggarwal Advocates for Strategic Reforms in NBFC Lending

Raman Aggarwal, Director of Finance Industry Development Council, urges the Finance Minister to facilitate NBFC growth via increased funding and policy adjustments. He highlights the sector's global rank, overseas borrowings, and suggests a refinance window, alongside tax exemptions, to alleviate operational difficulties.

In a crucial meeting with Finance Minister Nirmala Sitharaman, Raman Aggarwal, Director of the Finance Industry Development Council (FIDC), proposed strategic measures to foster the growth of non-banking financial companies (NBFCs) in India. FIDC, an industry body representing these entities, emphasized the significance of supportive policies.

Aggarwal expressed concern over the need for increased funding, citing the NBFC sector's rank as the third largest globally and referencing RBI data showing a 13.6% credit to GDP ratio. He noted, 'We are almost one-fourth of the total bank credit, demonstrating our sector's expansion necessitating more funds.'

Additionally, Aggarwal addressed the surge in overseas borrowings, detailing a USD 5.5 billion increase. He attributed this to reduced domestic bank lending, following an RBI circular elevating risk weights on such loans. To counteract rising borrowing costs, he advocated for a direct refinance window from bodies like SIDBI and NABARD, and sought tax exemptions on TDS for NBFC borrowers, labeling it an operational burden without benefits.

(With inputs from agencies.)