(MENAFN- KNN India)
New Delhi, Jul 22 (KNN) As Finance Minister Nirmala Sitharaman prepares to present the Union Budget in Parliament on Tuesday, business leaders have put forth several key proposals, with a focus on supporting Micro, Small, and Medium Enterprises (MSMEs) through financial sector reforms.
A prominent demand is the creation of a new category of Non-Banking Financial Companies (NBFCs) dedicated to priority sector lending (PSL).
Shachindra Nath, Founder & MD, UGRO Capital Ltd, has proposed the establishment of NBFC-PSL, which would allocate at least 85 per cent of their assets under management to the priority sector.
"Creating an NBFC-PSL category will foster a more inclusive and resilient financial ecosystem for MSMEs," Nath stated in an interview with PTI.
He further suggested that loans from banks to NBFCs for onward lending to MSMEs should be classified as PSL loans, with current caps removed.
Additional recommendations from Nath include reintroducing the Partial Credit Guarantee Scheme and expanding it to cover term loans.
This measure aims to provide a portfolio guarantee for the purchase of bonds or commercial papers issued by NBFCs-MSMEs by public sector banks, potentially increasing funding for smaller NBFCs.
To enhance recovery processes, Nath proposed harmonising the SARFAESI Act limit by reducing the cap for credit eligible under this act from Rs 20 lakh to Rs 1 lakh for NBFCs, aligning them with banks.
Umesh Revankar, Executive Vice Chairman, Shriram Finance Ltd, expects the government to maintain its focus on infrastructure development and the MSME sector.
He emphasised that improvements in logistics could provide India with a significant advantage in global competitiveness.
The Engineering Export Promotion Council (EEPC India) has urged the government to revive the interest subvention scheme for exporters.
EEPC India Chairman Arun Kumar Garodia highlighted the scheme's importance in light of rising interest rates, calling for the restoration of subvention rates for specific product categories and MSME exporters.
As the budget presentation approaches, these proposals reflect the industry's desire for measures to strengthen the financial ecosystem supporting MSMEs and enhance India's export competitiveness.
(KNN Bureau)
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