NBFC norms

| Updated on September 12, 2019


The Centre has been directing banks not to be tough in dealing with defaulters of bank loans of up to ₹2 crore. Recently, the RBI made it compulsory for banks to link the repo rate with interest rate, but it was not made applicable for NBFCs.

Likewise, complete waiver of foreclosure charges on prepayment of bank loans was also not made applicable to NBFCs.

Since NBFCs also act like banks, all such guidelines should be uniformly applicable to them too. Also, as NBFCs give loans, the TDS provision on the interest portion of EMIs must not be applicable for NBFCs, as most borrowers do not claim TDS from NBFCs, which becomes profit for the latter.

NBFCs should be directed to deposit unclaimed TDS in government-account.

Madhu Agrawal

New Delhi

New traffic laws

This refers to ‘New Motor Vehicles Act will not be implemented in Bengal: Mamata Banerjee’ (September 12). What else could one have expected from Mamata? Had it been so easy to implement, would the Centre have so 'drastically' amend the Motor Vehicles Act? However, there can’t be two opinions about the fact these fines could have been raised gradually rather than hiking them in one go?

Moreover, many a BJP ruled States (including Gujarat) do not subscribe to Union Minister Nitin Gadkari’s theory that the fines are intended to save lives and not raise revenue.

The Maharashtra Government has refused to implement the newly amended traffic laws, perhaps fearing a backlash in this poll-bound State.

By the way, will the new traffic laws equally apply to the nation’s VIPs, political bigwigs, and erring police vehicles too?

SK Gupta

New Delhi

Lunar mission

This is with reference to the editorial ‘A moon-struck nation’ (September 12). Though India’s lunar mission failed at the last moment, the space scientists need to be commended for their efforts. The orbiter is working well and the payloads on board are sending back huge amounts of data. The Prime Minister’s morale booster should help the scientists bounce back and achieve greater heights.

NR Nagarajan



Antitrust investigation

It has been reported that Facebook and Google have been standing up to antitrust investigations in the US, which have tough rules and regulations.

There must be strong support and encouragement for technology hubs across the world. Opposition to and frequent lawsuits against Google are an act of harassment. In general, most millennials use technology to advance their knowledge. Let there be balance of power to ensure maximum reach of technology in the best interests of all.

P Senthil Saravana Durai



What ails IBC

The implementation of IBC norms on the ground has been impeded by high haircuts for lenders, low returns for shareholders, underdeveloped market for distressed assets, and ambiguity while ascertaining a wilful-default — which allows dubious promoters, in some cases, to regain control of their business, at relatively lower valuations. The very purpose of the diktats to curb sub-prime lending is jeopardised by the recent proposal to establish a credit-enhancement fund, aimed at offering sovereign guarantee for a borrower, otherwise ineligible to secure a housing loan.

Undoubtedly, the move could boost the sentiment in the real-estate sector and support borrowers, not rated well, to obtain credit at a lower rate of interest, besides promising to develop a better market for stressed assets.

However, the initiative can significantly affect the growth of financial institutions in the informal sector and poses a risk on account of aggressive lending, as past-defaulters are not bound to improve their creditworthiness in future. That said, sovereign guarantees in the past have had limited success in tackling the NPA problem as banks/FIs are often reluctant to invoke the contract.

Girish Lalwani

New Delhi

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Published on September 12, 2019

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