Non-Banking Financial Companies (NBFCs) have sought parity with banks on several regulatory fronts, including tax treatment of fixed deposits for senior citizens, easier access to liquidity, and amendments to debt recovery laws. However, sources indicate a majority of the demands are unlikely to be accepted by the government.
Sources said NBFCs have urged the government to allow tax deduction at source (TDS) exemptions on fixed deposits held by senior citizens — at par with bank FDs. To shore up liquidity, NBFCs have also sought a dedicated refinance institution and access to the Reserve Bank of India’s (RBI) repo window.
In addition, NBFCs have pressed for the removal of the ₹20 lakh minimum threshold under the SARFAESI Act for initiating debt recovery. The current limit, they argue, restricts recovery from small-ticket defaulters and limits their ability to manage non-performing assets effectively.
However, the government is not inclined to accommodate two of the three key demands. Sources said access to the RBI’s repo window and the creation of a dedicated refinance body has been ruled out. Similarly, the proposal to remove the ₹20 lakh SARFAESI threshold for NBFCs is unlikely to be accepted, as it could lead to a spike in litigation, burdening debt recovery tribunals (DRTs) with a higher volume of cases.
“The relaxation could increase pendency in the already stretched recovery system,” a source said.
The only proposal that could be considered is tax parity with banks on senior citizen deposits, sources said.
NBFCs play a critical role in India’s credit delivery system, especially for small borrowers and underserved segments. But despite their growing role, the sector continues to face regulatory and structural constraints compared to banks — something that the industry wants to be addressed.
