Budget 2019: Easing of GST much-needed to boost SMEs

By Rajiv Sabharwal

Non-banking finance companies play an important role in nation building and drive economic growth. The recent measures introduced by the Reserve Bank of India pertaining to asset quality, asset liability management, and solvency augurs well for the sector.

To support financial stability and growth, the budget should focus on a robust and accessible system for fund flow especially to well- performing NBFCs with an established track record.

Banks should be allowed to extend Term funding against the on-lending and re-finance of agricultural and affordable housing originated by NBFCs and HFCs. Such exposures should be considered eligible under the Priority Sector Lending guidelines which should be over and above the LE norms with limit specifications.

NBFCs cater to the financial needs of the retail segment, while its liabilities are wholesale in nature. Retail investors use the Mutual Fund route which enjoy certain tax exemptions. To encourage more direct retail participation in the bond market, tax incentives can help and also increase the depth of the market.

The medium, small, and micro enterprises play a vital role in contributing to the development and growth of the country. Further simplification and easing of GST will provide the much-needed boost to SMEs and MSMEs.

Rajiv Sabharwal is the MD and CEO of Tata Capital

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