• Mon. Jan 30th, 2023

Comment on Pre Budget by Mr Shachindra Nath, Vice Chairman and Managing Director, U GRO Capital

Jan 19, 2023

Shachindra Nath

Sharing his budget wish list, Mr. Shachindra Nath, Vice Chairman, and Managing Director, of U GRO Capital, said, “To advance hassle-free credit access, we expect the government to provide active liquidity support systems for NBFCs in the upcoming Union Budget. This will relieve the stress of both lenders and borrowers. While banks and HFCs (home finance companies) have an active liquidity support system through RBI and NHB (National Housing Bank), there is no such support for NBFCs. Considering the stellar role of NBFCs in financial inclusion and job creation, it’s about time that the government, in consultation with RBI, creates a liquidity support system for NBFCs. We recommend that either SIDBI (Small Industries Development Bank of India) or NABARD (National Bank for Agriculture and Rural Development) should be made as the agency for providing active liquidity support to the NBFCs and there should be a budgetary allocation to SIDBI from the Government of India to provide this liquidity support.”

“Secondly, we recommend that the Government should reintroduce a partial credit guarantee scheme to cover onward lending to MSMEs. The Government has already introduced the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to catalyze the flow of institutional credit to MSMEs. The Credit Guarantee Scheme (CGS) was launched to strengthen the credit delivery system and to facilitate the flow of credit to the MSE sector, creating access to finance for unserved, under-served, and underprivileged, making availability of finance from conventional lenders to new-generation entrepreneurs. However, NBFCs are unable to borrow from the market or from the banking system. By reintroducing the partial credit guarantee scheme, banks can extend financial support to the NBFCs for onward lending and extend much-needed credit to the MSME sector.” Mr. Nath added.