Budget 2022 expectations: Banks & NBFCs seek relaxation for restructuring loan accounts, FDI limit hike for PSU banks among 6 key demands
Banking and NBFCs (Non-Banking Financial Company) has host of demands and expectations from the Union Budget to be presented by Finance Minister Nirmala Sitharaman on February 1, 2022
Banking and NBFCs (Non-Banking Financial Company) has host of demands and expectations from the Union Budget to be presented by Finance Minister Nirmala Sitharaman on February 1, 2022.
Among many demands, it seeks further relaxation for restructured loan accounts and an extended restructured scheme from the RBI. The RBI had allowed banks to restructure loans to MSMEs in 26 sectors without classifying them as non-performing assets (NPAs) meeting certain financial parameters by March 2022.
Brokerage firm Sharekhan is of the view that, once accepted, this will help banks and NBFCs with higher exposure to MSME segment.
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In another demand, the sector expects that the government extend the benefit of Rs 1.5lakh on interest paid on affordable housing loans. Earlier, the same was extended by one year till March 31, 2022, with the upper limit capped at Rs 45 lakh. Sharekhan believes that the government may extend these incentives till March 2023 as it falls short of its goal of "Housing for All."
It has also demanded setting up of refinance window for the NBFC sector and making the bank's lending to NBFCs under the priority sector lending to be given permanent status. The RBI had mandated lending by banks to NBFCs for on-lending to agriculture, MSME and housing to qualify as private sector lending. The window for the same closed on September 30, 2021.
Besides, the sector is also looking at the finance minister with the hope that she may consider raising the FDI limit to 74% in PSU banks and seek more clarity on the planned privatization of two PSBs and IDBI bank. Currently, FDI limit in PSU Banks is capped at 20%, while this limit is already 74% for private banks.
Also, it expects the government to hike funding under 'SWAMIH' from Rs 25,000crore to Rs 1 akh crore. This will help housing finance companies and banks having exposure to this segment, says Sharekhan.
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