Budget 2019 Expectations: NBFCs demand special bailout package from Nirmala Sitharaman

Non-Banking Financial Companies (NBFCs) have demanded from the finance minister Nirmala Sitharaman to address their liquidity crunch and a special bailout package would be ideal for her to announce in the budget 2019, which she would be presenting in the parliament on July 5th. The industry insiders are of the opinion that deduction of bad debts in case of banks and NBFCs should be linked to the RBI guidelines on provisioning norms to avoid litigation on the same.

Hemal Mehta, Partner, Deloitte India said, "Most NBFCs are under a huge liquidity crunch, which has a direct impact on the economic activities resulting in financial pressure and slowing down of businesses.  The FM along with support from RBI needs to create a professional panel to address the situation on a war footing. The NPAs situation of NBFC also needs a solution as discussed for the banks above. Deduction of bad debts in case of banks and NBFCs should be linked to the RBI guidelines on provisioning norms to avoid litigation on the same."

Seconding the demand of the NBFCs Prakash Pandey, Head of Research at Fairwealth Securities said, "Ever since the IL&FS crisis surfaced, the NBFC has been hit quite badly and their liquidity situation has gone from bad to worse. Since, it has been the main lending source to the majority of the industries like manufacturers, SMEs, MSMEs, Startups, real estate developers, etc., the bad ebb of the NBFCs have started to take a toll on the allied industries as well. So, the recent meeting of the RBI Governor Shaktikanta Das with the Finance Minister Nirmala Sitharaman ahead of the Union Budget 2019 has further fuelled the demand for a special package to the NBFCs in the budget coming ahead." He said that NBFCs and market experts are of the opinion that the Modi 2.0 government is taking this demand seriously and Shaktikanta Das and Nirmala Sitharaman meeting indicates the same.