NBFCs want banks to reduce interest rates

By Sarbajeet K Sen Mar 02 2010 , New Delhi

Tags: Banking
The ministry of finance on Tuesday kicked-off post-budget activity with representatives from
Indiabulls Financial Services, Srei Infrastructure Finance, Sundaram Finance and the Finance
Industry Development Council (FIDC), briefing officials on the role of the sector in financial
intermediation.

Sources said the issue of bank licences came up during the discussion in passing. “There was
passing reference to the banking licence issue. Maybe the government had this in mind while
calling the meeting but we cannot say for sure that this was the purpose of the meeting,” a source
present at the meeting said. The finance ministry had said that the meeting was to ascertain the
role of NBFCs and their future.

Those present at the meeting from the finance ministry were R Gopalan, secretary, financial
sector, G C Chaturvedi, additional secretary, banking, and Alok Nigam, join secretary, banking.
Among those representing the NBFC sector were Gagan Banga, chief executive officer
Indiabulls Financial Services, Srinivas Acharya, deputy managing director, Sundaram Finance,
Raman Aggarwal, co-chairman, FIDC.

NBFC representatives demanded a permanent refinance window either within the National Bank
for Agriculture and Rural Development (Nabard) or Small Industries Development Bank of India
(Sidbi) and the easing of interest rates by banks. The sector also sought the finance ministry's
intervention in expediting the issue of guidelines for the bank funding to NBFCs.

NBFC representatives have been asked to present the issues related to taxations. Among the tax
issues are exemption from certain tax deductions at source, removal of service tax on hire
purchase and leasing transactions and removal of multiple taxation on hire purchase and leasing
transactions. Finance ministry officials could not be reached for their comments.

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