During a pre-Budget consultation with stakeholders from the financial sector and capital markets, the Finance Industry Development Council (FIDC) - a key representative body of Non-Banking Financial Companies (NBFCs) - has called for major reforms to ease operational burden and improve liquidity for NBFCs.
One of their requests was the reduction in the loan amount threshold for enforcing security interest under the SARFAESI Act, from ₹20 lakh to ₹1 lakh.
The council said the current threshold leads to significant delays in the resolution of stressed accounts, taking up to five years, thereby escalating the number of non-performing assets (NPAs) on NBFCs' balance sheets and their legal costs.
Raman Aggarwal, director of FIDC, emphasised the absence of the SARFAESI Act's provisions for loans below ₹20 lakh hampers the resolution of distressed accounts. "This delay not only increases stressed accounts but also inflates litigation costs for NBFCs," he added.
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